Floor & Decor (NYSE:FND) reported fiscal 2025 fourth-quarter diluted earnings per share of $0.36, in line with the midpoint of the guidance it provided on its third-quarter call. Full-year diluted EPS was $1.92 versus $1.90 in the prior year, with management noting that fiscal 2024 included a $6.8 million, or $0.05 per share, net benefit tied to a derivative litigation settlement in the fourth quarter of 2024.
Fourth-quarter sales increased 2% to $1.13 billion, while comparable store sales declined 4.8%. For the full year, sales grew 5.1% to $4.684 billion and comparable store sales declined 1.8%, near the low end of the company’s expectations.
Management cited macro pressure but pointed to share gains and service results
Chief Executive Officer Brad Paulsen highlighted record Net Promoter Scores during 2025 and said the company is entering fiscal 2026 with a set of initiatives intended to drive market share gains and profitability “in any economic environment.” He emphasized priorities around new store productivity, PRO customer initiatives (including supply house capabilities and an enhanced loyalty platform), maintaining gross margin performance, and supply chain productivity improvements.
Store growth: 270 stores at year-end, with 20 more planned in 2026
In the fourth quarter, Floor & Decor opened eight new warehouse-format stores. For the full year, it opened 20 stores and closed one, ending fiscal 2025 with 270 stores, up 8% from 251 a year earlier. Management said it remains on track to open 20 new stores in fiscal 2026, primarily in markets where it already has a presence.
Paulsen said the company expects the vast majority of 2026 openings to be in Tier 1 and Tier 2 markets, which it believes should support “meaningfully stronger first-year volume.” The company also expects more than half of 2026 openings in the first half of the year versus 35% last year. Looking further out, management said it expects to have a footprint in every major U.S. market by the end of the first quarter of fiscal 2027 and reiterated a long-term goal of 500 warehouse-format stores.
The company also discussed construction cost reductions. Capital spending per store for the 2025 class of new stores was $10.2 million, $1.2 million (11%) lower than the fiscal 2023 class, and management said further improvements are expected for the 2026 class through store size optimization and greater use of second-use sites.
Sales trends: January improvement, then weather disruptions in February
Fourth-quarter comparable sales declined 4.8%, with monthly comps down 1.5% in October, 6.1% in November, and 6.7% in December. Management noted that the prior-year quarter benefited by about 110 basis points from Hurricanes Helene and Milton, which contributed to a tougher comparison in fiscal 2025.
Paulsen said the West region outperformed the company average for both the quarter and year. Entering fiscal 2026, he said comparable store sales rose 0.4% in January, the first January increase since 2022, which he linked to gradual improvement in existing home sales in December. However, he said early February sales were “meaningfully impacted” by Winter Storm Fern, which disrupted operations across more than half of the company’s stores and its Baltimore distribution center. Management said it does not expect to fully recover lost storm sales within the first quarter; year-to-date first-quarter comps were down 3.5%.
In the fourth quarter, the comp decline reflected a 4.2% drop in transactions and a 0.6% decline in average ticket. For the full year, transactions declined 3.5% and average ticket increased 1.8%.
Additional sales metrics discussed on the call included:
- Connected customer sales rose about 2% year-over-year and represented about 18.5% of total sales; average ticket for connected customers grew while transactions remained pressured.
- Sales to PRO customers grew slightly year-over-year in the fourth quarter and increased 9% for the full year, representing approximately 50% of total sales.
- Management said installation materials, described as a critical PRO category, grew in the fourth quarter and full year.
Paulsen also discussed product and category dynamics, including continued outperformance in the company’s Better and Best categories. He cited a shift toward value in vinyl, including customers selecting lower specification products at lower price points, and said the company is introducing new SKUs and targeted special buys intended to deliver value for PRO customers.
Margins, expenses, and balance sheet highlights
Chief Financial Officer Bryan Langley said fourth-quarter gross profit rose $9.8 million, or 2.0%, and gross margin was 43.5%, flat year-over-year and up 10 basis points sequentially. He said gross margin benefited from favorable product margin, inclusive of higher duties and tariffs beginning to impact results, but was offset by distribution center network expansion in Seattle and Baltimore, which created about 90 basis points of year-over-year gross margin pressure in the quarter.
For the full year, gross profit increased $115.7 million, or 6.0%, and gross margin improved 30 basis points to 43.6%. Langley attributed the improvement primarily to favorable product margin due to lower supply chain costs, partially offset by higher distribution center costs. He said distribution center investments pressured full-year gross margin by about 70 basis points.
Langley also noted the company consolidated operating expenses into a single SG&A line item in its reporting. Fourth-quarter SG&A expenses increased 4.0% to $439.2 million, and as a percentage of sales deleveraged about 80 basis points to 38.9%, primarily due to new stores and lower comparable sales. SG&A included about $3 million of expenses related to the company’s ERP implementation in the quarter. For the full year, SG&A rose 6.1% to $1.7738 billion and deleveraged about 30 basis points to 37.8%, including approximately $9 million related to the ERP implementation.
The effective tax rate rose to 24.0% in the fourth quarter from 19.9% a year earlier and increased to 21.8% for the full year from 18.8%, which Langley said was driven primarily by a decrease in excess tax benefits related to stock-based compensation. He said the year-over-year effective tax rate change impacted fiscal 2025 by $0.08 per share.
On liquidity, management said net cash provided by operating activities was $381.8 million in 2025 versus $603.2 million in 2024, with the decline primarily due to changes in trade accounts payable timing tied to inventory receipts. Inventory was $1.1 billion at year-end, essentially unchanged year-over-year. Capital expenditures were $300.4 million in 2025, down from $376.3 million in 2024. The company ended the year with $249.3 million in cash and cash equivalents and $198.2 million in debt associated with a term loan facility, with unrestricted liquidity of $909.8 million including availability under its ABL facility.
Fiscal 2026 outlook includes 53rd week and continued investment
Langley said fiscal 2026 includes a 53rd week at the end of the fourth quarter and provided guidance ranges that incorporate that additional week. The company guided to sales of $4.88 billion to $5.03 billion, representing 4% to 7% growth from fiscal 2025, including an expected $65 million contribution from the 53rd week. Comparable store sales are expected to range from down 2% to up 1%.
Other fiscal 2026 guidance items included gross margin of approximately 43.5% to 43.8%, SG&A as a percentage of sales of about 37.7% to 37.8%, adjusted EBITDA of about $560 million to $590 million (including an estimated $11 million contribution from the 53rd week), and diluted EPS of about $1.98 to $2.18 (including about $0.08 from the 53rd week).
Capital expenditures for fiscal 2026 are planned in the range of $250 million to $300 million. Management said it intends to open 20 warehouse-format stores and begin construction on stores opening in fiscal 2027, with those investments expected to require $160 million to $190 million. The company expects new store CapEx of $7 million to $8 million for the 2026 class versus $10.2 million for the 2025 class, citing store size optimization and increased use of second-use facilities.
In Q&A, Paulsen described priorities for improvement as getting “the core of our business growing again,” improving new store performance, enhancing the digital experience to better match the in-store experience, and driving annual supply chain productivity improvements through “singles and doubles” process and people initiatives. He also discussed the company’s PRO loyalty planning, noting the company intends to spend 2026 developing and testing a plan ahead of a potential national rollout.
Taylor closed by noting that, with Paulsen stepping into the CEO role, Paulsen will lead calls going forward, while Taylor will remain involved as Executive Chair focused on long-term strategic initiatives.
About Floor & Decor (NYSE:FND)
Founded in 2000 and headquartered in Atlanta, Floor & Decor Holdings Inc is a specialty retailer focused on hard surface flooring and related accessories in the United States. The company serves both professional installers and do-it-yourself customers through a growing network of warehouse-format stores and a comprehensive e-commerce platform.
Floor & Decor’s product offering spans ceramic and porcelain tile, engineered and solid hardwood, laminate, luxury vinyl plank and tile, natural stone and a full suite of installation materials such as grout, mortars and underlayment.
