Snapshot
Floor & Decor Holdings, Inc. reported $1.13B of revenue in Q4 2025, up 2.0% year over year, with diluted EPS of $0.36 and an operating margin of 4.6%.
- Revenue
- $1.13B
- YoY growth
- +2.0%
- Diluted EPS
- $0.36
- Operating margin
- 4.6%
What management said
- •Welcome to Floor and Decor's fiscal 2025 fourth quarter and full year 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 be walking through the key highlights from the quarter and the full year.
- •Then Bryan will share how we're approaching fiscal 2026 and the priorities that are shaping our outlook.
- •We're pleased to deliver fiscal 2025 fourth quarter diluted earnings per share of $0.36, which was in line with the midpoint of our earnings guidance provided on our third quarter earnings conference call.
- •For the full fiscal year, diluted earnings per share was $1.92, compared with $1.90 in the prior year.
- •For the full fiscal year, sales grew 5.1% to $4.684 billion, and comparable store sales declined 1.8%, which was near the low end of our expectations.
- •We are proud to have achieved record Net Promoter Scores in 2025, which underscore and validate our associates' efforts.
- •To further strengthen our supply house value proposition, we are piloting enhancements to PRO pricing, supported by an improved delivery offering for this customer segment.
- •Together, these and other initiatives build long-term capabilities that are expected to significantly increase switching costs and deepen our strategic advantage with PRO customers.
- •Maintaining strong gross margin performance will continue to be a priority in fiscal 2026.
- •We are prepared to take modest retail pricing actions to help offset the expected impact of tariffs and to manage both margin rate and dollars.
What went well
- •Full year diluted EPS of $1.92 grew year over year from $1.90, which included a $0.05 net benefit in the prior year, and fourth quarter EPS of $0.36 was in line with the midpoint of guidance.
- •Full year sales grew 5.1% to $4.684 billion and the company opened 20 new stores, ending the year with 270 locations, an 8% increase from 251.
- •Full year gross margin improved 30 basis points to 43.6% on favorable product margin from lower supply chain costs, despite roughly 70 basis points of distribution center pressure.
- •The company achieved record net promoter scores in 2025 and reduced comparable store operating expenses by approximately $67 million over three years (about $24.8 million in 2025).
- •Sourcing diversification advanced, with China representing 3% of fourth quarter receipts, down from 12.5% a year earlier.
- •Capital spending per store for the 2025 class fell to $10.2 million, $1.2 million or 11% lower than the 2023 class.
- •New store productivity improved, with recent quarterly opening cohorts contributing meaningfully higher first-year sales.
What went wrong
- •Fourth quarter comparable store sales declined 4.8% and full year comparable store sales declined 1.8%, near the low end of guidance, driven by soft existing home sales and a shift to smaller projects.
- •Fourth quarter SG&A deleveraged approximately 80 basis points to 38.9% of sales due to new stores and the comparable store sales decline.
- •The fourth quarter lapped an approximately 110 basis point hurricane benefit from the prior year, creating a tougher comparison.
- •A two-week February weather event impacted approximately 55% of stores and contributed roughly 200 to 300 basis points (about $12 million to $18 million) of quarter-to-date comp pressure.
- •Laminate and vinyl, particularly vinyl, saw customers trade down to lower spec and sub-$2 price points, and the category is expected to be pressured in 2026.
Guidance changes
| Metric | Period | Previous | Current | Change |
|---|---|---|---|---|
| New warehouse format store openings | FY2026 | 20 stores | 20 stores | unchanged |
| Comparable store sales cadence | FY2026 | — | second half better than first half, Q3 the high mark, sequential improvement each quarter at low and high ends | — |
| Average ticket comp | FY2026 | — | up low single digits, consistent across quarters | — |
| Gross margin rate cadence | FY2026 | — | first half to outperform second half; modest tariff-driven cost increases building through first half | — |
| Capital spending per store (2026 class) | FY2026 | $10.2M (2025 class) | expected to benefit from further cost reductions and more second-use sites | lower |
Performance breakdown
| Metric | YoY change | Reason |
|---|---|---|
| Full year diluted EPS | +$0.02 to $1.92 | Earnings growth despite comp pressure, against a prior year that included a $0.05 litigation settlement benefit. |
| Full year sales | +5.1% to $4.684B | 20 new store openings offsetting a 1.8% comparable store sales decline. |
| Q4 comparable store sales | -4.8% | Soft existing home sales, smaller projects, and lapping the ~110 bps hurricane benefit. |
| Full year gross margin | +30 bps to 43.6% | Favorable product margin from lower supply chain costs, partially offset by ~70 bps of distribution center costs. |
| Q4 SG&A | +4.0% to $439.2M (deleverage ~80 bps) | Primarily the eight new stores opened in the quarter; comparable store SG&A decreased $14.2 million. |
| Stores greater than five years old | approximately $21M in sales (from ~$22M) | Soft demand environment, though still generating about 23% EBITDA. |
Earnings call themes & trends
| Topic | Previous mention | Current period | Trend |
|---|---|---|---|
| Pro loyalty and pricing | EDLP-only model | Designing Pro Loyalty 2.0 for early 2027 relaunch; piloting Pro pricing enhancements to increase switching costs | new initiative |
| Commercial / RAM expansion | Stable RAM count | 67 regional commercial account managers at year-end; planned phased expansion into metros starting with New York City and Dallas | expanding |
| New store first-year productivity | Recent classes below target | 2026 class weighted to tier-one/tier-two markets and first-half openings (>50% vs 35% prior year) for stronger first-year volume | improving |
| Cannibalization | Higher with 30-32 store openings | Expected to decrease in 2026 with fewer (20) openings | improving |
| Tariffs | Minimal 2025 impact | Modest cost increases assumed for 2026, building through first half and fully embedded in second half | building |
| Expense presentation | Separate selling/store and G&A lines | Consolidated into a single SG&A line to conform to peers | changed |
Q&A summary
What are the biggest opportunities to drive acceleration or operational improvement as the new CEO?
Brad Paulsen cited three priorities: getting the core business growing again by improving new store first-year performance, the digital experience under a new leader, and supply chain productivity via a process-and-people 'singles and doubles' approach rather than transformational investment.
What is the comp cadence for 2026 and the impact of February storms and key markets?
Second half comps are expected to be better than the first half with Q3 the high mark and sequential improvement each quarter. February storms hit about 55% of stores and contributed 200 to 300 basis points ($12 million to $18 million) of quarter-to-date pressure; the initial model assumed slightly negative Q1 comp before the storms, with pressure largely transaction-based while average ticket held up.
Has the EDLP strategy been a headwind for the Pro business, and would you tweak the pricing architecture?
Pro is around 50% of sales with up to 20 points of additional influence on the rest. EDLP built a multibillion-dollar Pro business, but competitors offer rebates and discounts that some pros use as profit, creating a financial switching cost. The company will spend all of 2026 developing a Pro Loyalty and pricing plan, with testing before a national rollout.
Why have share gains not accelerated more during the three-year downturn?
Tom Taylor believes the company has taken share, primarily through new store growth, with good execution on innovation and pricing spreads. Whether it should have taken more is fair; future Pro loyalty and tier initiatives should help take share faster. He did not expect the downturn to last this long with home sales hovering around 4 million annualized.
How do gross margin, product margin, ticket, and price sensitivity come together for upcoming quarters?
2025 tariff impact was minimal given slower (just over 2x) inventory turns; 2026 assumes modest tariff-driven cost increases building through the first half, so first-half gross margin should outperform the second half. Q4 ticket pressure was mostly from lapping the hurricane benefit, not gross margin. Modest, surgical price increases are embedded in average ticket guidance of up low single digits, with laminate and vinyl expected to stay sensitive.
What is driving the step-up in new store productivity?
Both higher conviction in the stores being opened and the cadence of openings (eight in Q4 and five in Q3 versus three in Q2 and four in Q1), which drives the sales-contribution view of new store productivity.