Snapshot
Floor & Decor Holdings, Inc. reported $1.18B of revenue in Q3 2025, up 5.5% year over year, with diluted EPS of $0.53 and an operating margin of 6.1%.
- Revenue
- $1.18B
- YoY growth
- +5.5%
- Diluted EPS
- $0.53
- Operating margin
- 6.1%
What management said
- •Welcome to Floor & Decor fiscal 2025 third quarter earnings conference call.
- •A reconciliation of each of these non-GAAP measures to the most directly comparable GAAP financial measure can be found in the earnings press release, which is available on our Investor Relations website at ir.flooranddecor.com.
- •During today's conference call, Brad, Bryan, and I will discuss our third quarter earnings highlights.
- •Before we get started, I want to share some exciting news that was announced this afternoon alongside our earnings release.
- •I am looking forward to transitioning into the role of Executive Chair of the Board, where I will focus on shaping our long-term strategic vision and unlocking new avenues for growth.
- •I'm excited and honored to step into this role and lead our next phase of growth, scaling towards 500 warehouse-format stores and accelerating our commercial flooring distribution expansion.
- •We are pleased to report fiscal 2025 third quarter diluted earnings per share of $0.53, a 10.4% increase over the prior year, prior year's $0.48.
- •Total sales grew 5.5% to $1,180 million, while comparable store sales declined at 1.2% from the same period last year, approaching the low end of our expectations.
- •We're proud of our disciplined expense management and gross margin performance, which reflect a successful execution of our tariff mitigation strategies.
- •We remain confident that existing home sales and demand for hard surface flooring will recover over time.
- •We're playing the long game with discipline and intention as we build long-term earnings power.
- •Year to date, through the third quarter, we opened 12 new locations and closed one, ending the period with 262 stores, a 9% increase from 241 stores in the same period last year.
What went well
- •Third quarter diluted earnings per share increased 10.4% to $0.53 from $0.48, exceeding the high end of guidance and marking the second consecutive quarter of double-digit EPS growth.
- •Total sales grew 5.5% to $1,180 million despite a 1.2% comparable store sales decline.
- •Stores achieved their highest net promoter scores ever in September.
- •Product margin rose approximately 80 basis points year over year, demonstrating tariff mitigation, even as reported gross margin slipped only 10 basis points to 43.4%.
- •The company opened five new stores, ended the quarter with 262 locations (up 9% year over year), and opened its fifth distribution center, a 1.1 million square foot Seattle-Tacoma facility.
- •The company ended the quarter with $893.5 million in unrestricted liquidity, including $204.5 million in cash.
What went wrong
- •Comparable store sales declined 1.2%, approaching the low end of expectations, driven by a 3% decline in transactions, with September comps down 2.2%.
- •Average ticket of +1.8% came in at the low end of guidance due to product mix changes, and fourth quarter-to-date comparable store sales were down 2%.
- •Distribution center costs from Seattle and the future Baltimore facility pressured gross margin by approximately 90 basis points in the quarter.
- •Average first-year sales among the 2023, 2024, and 2025 store classes are approximately $11 million, below the $14 million to $16 million long-term target.
- •Commercial multifamily housing softness persisted, with many developers pausing or delaying purchase orders and elevated promotional activity in luxury vinyl tile.
Guidance changes
| Metric | Period | Previous | Current | Change |
|---|---|---|---|---|
| New warehouse format store openings | FY2025 | 20 stores | 20 stores (on track) | unchanged |
| New warehouse format store openings | FY2026 | — | 20 stores | — |
| Comparable store sales | Q4 FY2025 | — | expected to decline (lapping ~110 bps hurricane benefit) | — |
| Average ticket comp | Q4 FY2025 | — | essentially flat | — |
| Kitchen cabinet rollout | FY2025 | — | approximately 200 stores | — |
Performance breakdown
| Metric | YoY change | Reason |
|---|---|---|
| Diluted EPS | +10.4% to $0.53 | Disciplined expense management and gross margin performance despite soft demand. |
| Total sales | +5.5% to $1,180M | New store growth offsetting a 1.2% comparable store sales decline. |
| Comparable store sales | -1.2% | Transactions down 3% on weak housing demand and smaller projects, partially offset by average ticket up 1.8%. |
| Gross margin rate | -10 bps to 43.4% | Approximately 90 bps of distribution center cost pressure, partially offset by ~80 bps of favorable product margin. |
| Spartan Services sales | +13.3% | Growing presence in high-specification sectors partially offsetting multifamily softness. |
| Connected customer sales | +2% (18.8% of sales) | Average ticket growth while transactions remained under pressure. |
Earnings call themes & trends
| Topic | Previous mention | Current period | Trend |
|---|---|---|---|
| CEO transition | Tom Taylor as CEO | Brad Paulsen appointed CEO effective fiscal 2026; Taylor to become Executive Chair | new |
| New store productivity | First-year sales target $14M-$16M | Recent classes averaging ~$11M, viewed as trough-level; pivoting to more tier-one and tier-two markets | declining |
| New store construction cost | Fiscal 2023 class baseline | Fiscal 2025 class ~$1.5M lower than 2023; further improvement expected for 2026 | improving |
| Housing/macro environment | Existing home sales weak | Mortgage rates above 6% and existing home sales around 4 million annualized; bouncing along the bottom | stable/weak |
| Distribution center investment | Seattle opening | Seattle operating with ~90 bps gross margin pressure; second Baltimore DC still to ramp | ongoing |
Q&A summary
How do you respond to investors who view the CEO transition timing as concerning amid subdued sales and lower new store productivity?
Tom Taylor said he is not going anywhere and will partner with Brad Paulsen as Executive Chair, citing a proven track record and strong team. The company understands what a trough looks like, has a good store class for next year with lower costs, and is pivoting to mid- and top-tier markets for the 2026 class.
What could the comp look like in a hypothetical 3% to 4% existing home sales environment in 2026, given new store waterfall benefits but home price pressure in Texas and Florida?
It is too early to discuss 2026, but if existing home sales comp positive, the company has a good ability to comp positive. New stores still provide a waterfall benefit (less than years ago), each recent class is comping positive, and nearly 50% of stores are less than five years old.
How can the slowdown be attributed to a contracting industry versus competition?
It is much more a contracting industry issue; across publicly reported flooring retailers and manufacturers, everyone has been in a negative environment while Floor & Decor's total growth has been positive. Recent classes opened in smaller, declining markets, and competitors appear to be doing worse.
Why are comparable store sales degrading rather than benefiting from independent and regional closures?
Management does not believe comps are getting much worse; the company is bouncing along the bottom and doing better than peers given its over 5% total growth. On a two-year stack, every quarter is sequentially improving (Q1 -13.3%, Q2 -8.6%, Q3 -7.6%), and product margin was up 80 basis points year over year.
Can you quantify price changes and the consumer response?
The company has taken modest price increases through the year. Better and best products continue to outperform good, and customers buying a project still purchase the better products they want, just doing less square footage and fewer projects.
What drove the average ticket of +1.8% to the low end, and is there trade-down?
Two drivers: a product mix shift, primarily slower growth in higher-ticket laminate and vinyl, and a slight tick down in job size pressuring average square footage. The implied Q4 ticket is essentially flat.