Welcome to Floor & Decor's fiscal 2026 second quarter earnings conference call. A reconciliation of each of these non-GAAP measures to the most directly comparable GAAP financial measures can be found in the earnings press release, which is available on our investor relations website at ir.flooranddecor.com. After that, Bryan will share our perspective on the remainder of 2026, including how we're navigating the current environment while continuing to invest in our strategic priorities and long-term growth opportunities. Sales to pros continued to outperform the company and grew approximately 4% from the same period last year, accounting for about 55% of sales.
Lastly, average ticket grew 0.8% year-over-year, despite lapping last year's strongest quarterly growth rate of 3.8%. Demand softened around the July 4th holiday period while the housing market remained constrained by subdued existing home sales activity. Installation materials continue to deliver strong year-over-year growth as we expanded our share of wallet with pros and further strengthened our position in the market. Growth in the wood category was driven by market share gains in engineered and unfinished wood, acoustic wall panels, and the success of our bulk out strategies.
The combination of slowing demand for vinyl and excess industry supply continues to put pressure on the category, which could continue into 2027. These locations extend our presence in tier one and tier two markets, where household units, population density, and home improvement activity support the long-term demand profile we target in site selection. In the second quarter, online sales penetration reached 20.3% of total sales, up from 18.6% in the prior year period and up 110 basis points from the first quarter. We believe delivering a best-in-class omnichannel experience represents one of our largest opportunities to accelerate growth, gain market share, and achieve our long-term sales objectives.
| Metric | Period | Current guidance |
|---|---|---|
| Total sales | FY2026 | $4,770M-$4,990M (+1.8% to +6.5%); 53rd week adds ~$65M |
| Comparable store sales | FY2026 | Flat to -4% (confidence in the midpoint) |
| Adjusted gross margin | FY2026 | ~43.6%-43.8% (Q1's 44.0% likely the year's high point) |
| Adjusted EBITDA | FY2026 | ~$550M-$585M (53rd week adds ~$11M) |
| Adjusted diluted EPS | FY2026 | ~$1.88-$2.13 (52-week basis $1.80-$2.05; GAAP EPS ~$2.20-$2.45) |
| Capital expenditures | FY2026 | ~$240M-$275M; SG&A ~38% of sales; tax rate ~23% |
| Metric | YoY | Note |
|---|---|---|
| Total sales | +3% to $1,250.3M | Pro sales up ~4% (55% of sales) and new-store contribution offset a 2.1% comp decline. |
| Comparable store sales | -2.1% | Continued softness in large discretionary flooring projects, improving sequentially (April -5.1% to June -0.3%). |
| Adjusted diluted EPS | $0.58 (flat) | Disciplined expense management and merchandising execution offset the comp decline; GAAP EPS $0.89 including a $0.31 tariff-refund/refinancing benefit. |
| Adjusted gross margin | -20 bps to 43.7% | Within the expected range; a ~$6M sell-through benefit from tariff-refund-reduced inventory helped offset oil and domestic supply-chain cost inflation. |
| Adjusted EBITDA | +1.2% to $152.0M | Margin of 12.2% (vs 12.4%); comparable-store SG&A fell $13.7M on productivity, offset by non-comp new-store SG&A up $26.7M. |
| Online sales penetration | 20.3% (from 18.6%) | Up 110 bps sequentially, reflecting progress on digital and omnichannel capabilities. |
| Operating cash flow (H1) | $278.4M vs $155.3M | Earnings, tariff-refund cash and inventory productivity; inventory up only 0.7%. |
| Topic | Previous mention | Current period | Trend |
|---|---|---|---|
| IEEPA tariff refunds | Tariff cost management | $87M recovered ($56M one-time gross-profit benefit on sold-through inventory, $28M inventory reduction recognized as sold, ~$6M in Q2); deployed to offset inflation, selectively invest in price for share, and fund capital allocation, with more optionality into 2027. | — |
| Sequential demand improvement and bottoming debate | Choppy discretionary demand | Comps improved through the quarter with broadening regional performance, but management is cautious about calling a bottom given a July 4th slowdown and low existing home sales, assuming 2026 looks like 2025 and leaning on self-help initiatives. | — |
| Laminate and vinyl pressure | Category weakness identified | Excess supply has 'devalued' the category, pressuring price/ticket into at least H1 2027; Floor & Decor is responding with aggressive pricing where elastic, opportunity buys and assortment resets to take share, plus some category shift toward wood and tile. | — |
| Pro and installation-materials strategy | Growing pro penetration | Pro grew ~4% to 55% of sales; installation materials (a footstep driver) and supply-house strategies are winning share of wallet, expanded RAM commercial team to 80 (shifting focus to productivity), with a new pro app coming next year. | — |
| Omnichannel transformation | Building digital capability | Online penetration reached 20.3%; an 18-24 month transformation targets a seamless online/in-store experience tailored to homeowners (research-heavy journeys) and pros (speed/pricing/inventory visibility). | — |
| Store growth and balance-sheet strength | Front-loaded 2026 openings | 11 stores opened in H1 (~55% of plan) at ~55,000 sq ft, with the balance weighted to Q4; refinanced facilities (2031/2033 maturities), $942.4M liquidity, and buybacks against a $400M authorization. | — |