Snapshot
Floor & Decor Holdings, Inc. reported $1.15B of revenue in Q1 2026, up -0.7% year over year, with diluted EPS of $0.37 and an operating margin of 4.5%.
- Revenue
- $1.15B
- YoY growth
- +-0.7%
- Diluted EPS
- $0.37
- Operating margin
- 4.5%
What management said
- •Welcome to Floor & Decor's fiscal 2026 first 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.
- •Before I turn to our first quarter earnings, I'd like to discuss our capital allocation framework and the actions we announced today.
- •Consistent with our disciplined capital allocation framework, we announced that our board of directors has authorized a share repurchase program for up to $400 million of the company's outstanding common stock.
- •As we continue to expand our store base, we are optimizing our capital spend per location, which should drive strong returns, enabling us to both fund growth and generate meaningful excess cash flow.
- •This positions us to flex our pace of openings over time while returning capital to shareholders, all while supporting our long-term opportunity to operate 500 warehouse format stores across the United States.
- •The repurchase program is a natural extension of our capital allocation philosophy, which prioritizes capital allocation based on returns that exceed our weighted average cost of capital.
- •We continue to invest in our commercial flooring platforms and new growth concepts, including our outdoor and unfinished flooring offerings.
- •Once these priorities are met, we intend to return excess capital to shareholders in ways that are designed to enhance long-term value while maintaining a strong balance sheet.
- •store opportunity built out and a large under-penetrated opportunity in commercial flooring, we believe we have a substantial runway for growth ahead.
- •These dynamics resulted in first quarter earnings coming in weaker than we anticipated.
- •For the quarter, we delivered diluted earnings per share of $0.37 compared to $0.45 in the same period last year.
What went well
- •The board authorized a share repurchase program of up to $400 million, the company's first, funded from excess free cash flow without incremental debt.
- •Gross margin expanded 20 basis points to 44.0% from 43.8%, exceeding expectations, primarily from the timing benefit of strategic pricing initiatives.
- •The company generated $109.2 million in cash from operating activities, up from $71.2 million in the prior-year period, and ended the quarter with $1.0072 billion in unrestricted liquidity.
- •First quarter pro sales increased 1.4%, supported by supply house merchandising strategies, with installation materials, tile, decorative accessories, and wood outperforming the company comp.
- •The company completed portions of its ERP implementation, going live with financial systems and certain merchandising functions, and achieved all-time high service scores.
- •January comparable store sales were positive at +0.4%, and average store cost is expected to be approximately $7.5 million to $8 million this year, down from as high as $11.7 million in 2023.
What went wrong
- •First quarter diluted EPS declined to $0.37 from $0.45, coming in weaker than anticipated.
- •Total sales decreased 0.7% to $1,152 million and comparable store sales declined 3.7%, driven by a 5.5% decrease in transactions.
- •Adverse weather accounted for 150 to 200 basis points of transaction pressure, with February comps down 6.9% and March down 4%, and second quarter-to-date comps down 4.5%.
- •Operating income declined 18.4% to $52.4 million and adjusted EBITDA declined 6.4% to $121.5 million, with adjusted EBITDA margin down to 10.5% from 11.2%.
- •SG&A deleveraged approximately 120 basis points to 39.5% of sales due to new store openings and the comp decline.
- •Spartan Surfaces results were weaker than expected, with softness coming out of multifamily.
- •Consumer Sentiment fell sharply to 53.3 in March near all-time lows, and March existing home sales fell to 3.98 million, down 3.6% sequentially and 1% year over year.
Guidance changes
| Metric | Period | Previous | Current | Change |
|---|---|---|---|---|
| Diluted EPS | FY2026 | prior guidance | lowered by approximately $0.10 to $0.15 | lowered |
| Gross margin rate | FY2026 | 43.5% to 43.8% | 43.6% to 43.8% | low end raised |
| Average ticket comp | FY2026 | — | flat to up low single digits | — |
| Transaction comp | FY2026 | — | down low single digits to down mid-single digits | — |
| New warehouse format store openings | FY2026 | 20 stores | 20 stores (committed) | unchanged |
| Comparable store sales cadence | FY2026 | — | low end has Q3 as high quarter; high end assumes sequential improvement through the year | — |
Performance breakdown
| Metric | YoY change | Reason |
|---|---|---|
| Diluted EPS | -$0.08 to $0.37 | Weaker-than-anticipated demand, adverse weather, and expense deleverage on the comp decline. |
| Total sales | -0.7% to $1,152M | Comparable store sales decline of 3.7% partially offset by new stores. |
| Comparable store sales | -3.7% | Transactions down 5.5% (150-200 bps from weather), partially offset by average ticket up 1.9%. |
| Gross margin rate | +20 bps to 44.0% | Timing benefit of strategic pricing initiatives, partially offset by higher supply chain costs and ~60 bps of distribution center pressure. |
| SG&A | +2.5% to higher dollars (deleverage ~120 bps to 39.5%) | 22 new stores opened since Q1 2025; comparable store SG&A decreased $9.0 million. |
| Operating income | -18.4% to $52.4M | New store impact and expense deleverage from the 3.7% comp decline. |
| Adjusted EBITDA | -6.4% to $121.5M | Lower sales and margin deleverage. |
Earnings call themes & trends
| Topic | Previous mention | Current period | Trend |
|---|---|---|---|
| Capital allocation / buyback | Invest in stores and growth concepts | Same priorities plus a new up to $400 million discretionary share repurchase using excess cash, no incremental debt | new |
| Laminate and vinyl | Pressured, customers trading down | Continued pressure, primarily vinyl; sub-$2 value offers and 20+ in-stock styles introduced to capture shifting demand | declining |
| Macro / consumer | Cautious consumer | Consumer Sentiment 53.3 near lows, elevated mortgage rates, higher gas prices, Middle East tensions; existing home sales 3.98 million | weakening |
| Smaller-format stores | Larger 75,000-80,000 sq ft boxes | 2026 class averaging 55,000 sq ft to densify urban markets without sacrificing assortment or experience | changing |
| Pro loyalty revamp | In development | Led by new Chief Customer Officer Krystal Zell; differentiated program targeting service, assortment, and price for Q1 2027 rollout | ongoing |
| Tariffs and input costs | Minimal 2025 impact | Modest tariff impact starting; ocean contracts being renegotiated with back-half flow-through; PVC exposure minimal so far | building |
Q&A summary
Is the laminate and vinyl weakness driven by housing or by product, innovation, or sourcing?
It is the vinyl portion under pressure since the second half of last year, driven by a consumer preference shift to lower spec and sub-$2 price points. The company took quick action with value offers but expects continued pressure as it becomes a math problem of lower average selling price without a meaningful square footage lift; other big categories like tile, installation materials, and decorative accessories are performing well.
What is the EPS sensitivity to the sales shortfall and where are the offsets given higher energy and logistics costs?
Higher energy costs are embedded and expected to modestly impact gross margin; if the elevated environment persists the company trends to the low end. The low end of gross margin guidance was raised to help offset sales pressure. The historical rule of thumb of about $0.10 per comp point is being outperformed through flexing labor to transactions across 70% of stores, discretionary spend control, distribution center cost management, and G&A alignment.
Why not slow store openings further given the weaker demand, and how does that relate to buybacks?
The company remains committed to 20 stores, encouraged by early results from six new stores in a tough environment, and views new store openings as the best use of capital and critical to long-term strategy. Average store cost is down to approximately $7.5 million to $8 million from $11.7 million in 2023, and excess cash beyond store and growth investment can be returned via the share repurchase.
Why lower guidance this early in the year given April showed two-year stack acceleration?
Planning assumed 2026 would look like 2025 with a path to positive comps on housing stability, but a number of unexpected developments changed the demand environment, so management recalibrated to a wider-than-normal range. At the current run rate with no improvement, the company has confidence in the midpoint, and improvement in demand drivers would move it toward the high end.
Is Floor & Decor losing market share given same-store underperformance versus the industry?
Management does not see share loss; even in pressured laminate and vinyl they do not believe they are losing share meaningfully, and feel good about installation materials, tile, wood, and decorative accessories. Publicly available data, third-party data, and vendor feedback do not match the interpretation of share loss; the focus is accelerating share gains and delivering positive comps with any stability.
How aggressive will the share repurchase be?
It is a discretionary program using both programmatic and opportunistic purchases given the stock dislocation, funded by excess cash without debt. The company plans to start executing in the second quarter, with the 2026 impact not very material and incorporated within the guidance range.