Financial Data and Key Metrics Changes - The company reported diluted earnings per share of $0.45 for Q1 fiscal 2025, a slight decrease from $0.46 in the same period last year [8] - Total sales increased by 5.8% to $1.161 billion from $1.097 billion year-over-year [9] - Gross profit rose by 8.1% driven by a 5.8% increase in sales and a 100 basis point increase in gross margin rate to 43.8% [34] - Selling and store operating expenses increased by 10.3% to $368.8 million, primarily due to new stores [34] Business Line Data and Key Metrics Changes - Comparable store sales decreased by 1.8% year-over-year, with the West Division outperforming this decline [20] - Sales growth was strongest in laminate and luxury vinyl plank, wood, and installation materials [22] - Connected customer sales increased by 2.1%, now accounting for approximately 18.3% of total sales [24] - Sales to professional customers continued to grow, accounting for about 50% of total sales [27] Market Data and Key Metrics Changes - The U.S. is now the largest country of manufacture for the company, accounting for approximately 27% of products sold, up from 20% in fiscal 2018 [14] - China accounted for 18% of products sold in fiscal 2024, down from 25% in fiscal 2023 and 50% in fiscal 2018 [14] Company Strategy and Development Direction - The company plans to open 20 new warehouse format stores in fiscal 2025, down from a previous expectation of 25 [18] - A tariff steering committee has been organized to manage tariff complexities and maintain operational agility [11] - The company is focusing on sourcing diversification to find high-quality products at competitive prices [13] Management's Comments on Operating Environment and Future Outlook - The management expressed concerns about high volatility and uncertainty in the economic environment, which could impact consumer spending [10] - The company is proactively implementing flexible plans to navigate potential economic downturns [10] - The updated fiscal 2025 guidance reflects the uncertain economic environment, with total sales expected to range from $4.66 billion to $4.8 billion [40] Other Important Information - The company maintained a strong balance sheet with $949.8 million in unrestricted liquidity [38] - The effective tax rate increased to 22% from 12.8% due to a decrease in excess tax benefits related to stock-based compensation [36] Q&A Session Summary Question: Follow-up on guidance and tariff impact - Management confirmed that they have experience dealing with tariffs and are negotiating necessary price increases to offset impacts [46][47] Question: Perception of business weakness and guidance reduction - Management acknowledged the difficulty in predicting consumer demand but emphasized strong execution and market share growth [57][59] Question: Price increases across the industry - Management noted that they have seen price increases from competitors but have not yet raised prices beyond normal adjustments [63][64] Question: Store unit growth criteria - Management stated that the decision to reduce store openings was based on current market conditions and sales performance [68][69] Question: Acceleration in sales trends - Management indicated that improvements in sales were consistent and not solely due to weather or tariff announcements [78][80] Question: Sourcing advantages post-tariff - Management confirmed that they are sourcing from more countries now than in the past and do not anticipate a significant change in their sourcing advantage [84][86]
Floor & Decor(FND) - 2025 Q1 - Earnings Call Transcript