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Floor & Decor Holdings, Inc. (FND)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 delivered net sales of $1.1607B (+5.8% YoY), diluted EPS $0.45 (-2.2% YoY), comps -1.8%; EPS beat consensus slightly, while revenue was marginally below Street; gross margin expanded 100 bps to 43.8% on lower supply chain costs .
  • Management cut FY25 guidance (sales, comps, EPS, store openings) reflecting macro/tariff uncertainty, but emphasized ability to offset universal tariffs via vendor negotiations, pricing, and sourcing diversification; gross margin rate expected ~43.5–43.8%, with DCs a 60–70 bps drag .
  • Strategic positives: continued share gains, strong pro customer mix (~50% of sales), connected customer penetration (18.3%), and design services outperformance; Q2-to-date comps improved to +1.1% with ticket leading .
  • Key catalysts: trajectory of tariffs (and potential reciprocal tariffs), existing home sales trends, the reduced 2025 store opening plan (20 vs 25), and margin resilience amid distribution center ramp .

What Went Well and What Went Wrong

  • What Went Well

    • Gross margin rate rose to 43.8% (+100 bps YoY) on lower supply chain costs; operating margin improved to 5.5% (+10 bps YoY) .
    • Pro sales grew and remained ~50% of total; design services growth outpaced company average, with higher tickets and margins when designers are involved .
    • Early Q2 saw comps turn positive (+1.1% quarter-to-date), with ticket leading and no evidence of trade-down behavior; West division outperformed .

  • What Went Wrong

    • Comparable store sales declined 1.8%; transactions down 3.8% with average ticket up only 2.1% .
    • Net income decreased 2.3% YoY to $48.9M despite revenue growth, and EPS fell to $0.45 (-2.2% YoY) .
    • FY25 outlook reduced across sales, comps, EPS, adjusted EBITDA, and store openings (20 vs 25), reflecting macro/tariff uncertainty and DC drag on margin .

Financial Results

MetricQ3 2024Q4 2024Q1 2025Q1 2025 Consensus*
Revenue ($USD Billions)$1.118 $1.107 $1.161 $1.164*
Diluted EPS ($)$0.48 $0.44 $0.45 $0.448*
Gross Margin (%)43.5% 43.5% 43.8% N/A
Operating Margin (%)5.9% 5.4% 5.5% N/A
Net Income ($USD Millions)$51.7 $47.5 $48.9 N/A
Adjusted EBITDA ($USD Millions)$132.9 $119.8 $129.8 N/A
  • Actual vs consensus (Q1): revenue slight miss ($1.1607B vs $1.1643B*), EPS slight beat ($0.45 vs $0.4477*). Values with asterisks retrieved from S&P Global.

Segment/KPI highlights:

KPI/SegmentQ3 2024Q4 2024Q1 2025
Comparable Store Sales (%)-6.4% -0.8% -1.8%
Average Ticket YoY (%)N/A+1.3% +2.1%
Transactions YoY (%)N/A-2.1% -3.8%
Pro Sales Mix (% of Sales)~50% ~50% ~50%
Connected Customer Penetration (%)~18% ~18% 18.3%
Stores Opened (Net)+11 +10 +4 opened, 1 closed; 254 stores, 5 design studios
Spartan Surfaces YoY Sales Growth (%)N/A-17.9% Q4 +3.8% Q1
Spartan Surfaces YoY EBIT Growth (%)N/A-25.4% FY24 +1.7% Q1

Guidance Changes

MetricPeriodPrevious Guidance (Feb 20, 2025)Current Guidance (May 1, 2025)Change
Net Sales ($USD Billions)FY 2025$4.740–$4.900 $4.660–$4.800 Lowered
Comparable Store Sales (%)FY 2025~0% to +3% ~(-2%) to +1% Lowered
Diluted EPS ($)FY 2025$1.80–$2.10 $1.70–$2.00 Lowered
Adjusted EBITDA ($USD Millions)FY 2025$540–$575 $520–$560 Lowered
Interest Expense, net ($USD Millions)FY 2025~3 ~5 Raised
Gross Margin (%)FY 2025~43.4–43.7 ~43.5–43.8 (Q2 high watermark); DC drag 60–70 bps Clarified (DC drag)
D&A ($USD Millions)FY 2025~245 ~245 Maintained
Tax Rate (%)FY 2025~21–22 ~21–22 Maintained
Diluted Wgtd Avg Shares (Millions)FY 2025~109 ~109 Maintained
New Store Openings (#)FY 202525 20 Lowered
Capital Expenditures ($USD Millions)FY 2025$330–$400 $310–$360 Lowered

Earnings Call Themes & Trends

TopicQ3 2024 (Prior-2)Q4 2024 (Prior-1)Q1 2025 (Current)Trend
Tariffs/TradeAcknowledged geopolitical/tariff risk Anticipated additional tariffs; strategy: negotiate, diversify, price Universal tariffs embedded; aim GM rate neutral via vendor negotiations/pricing; reciprocal tariffs would impact 2026 more Heightened focus; execution plan
Sourcing DiversificationBroad vendor/country network USA largest origin (27%); China 16% in Q4, 18% FY24 Plan to reduce China receipts to mid–low single digits by FY25 exit; last China PO for laminate/vinyl placed in Q1 Accelerating shift away from China
Supply Chain CostsMargin pressure earlierGross margin +130 bps Q4 on lower supply chain costs Gross margin +100 bps Q1 on lower supply chain costs Positive tailwind sustained
Pro Customer Mix~50% of sales ~50% of sales ~50% of sales; strong comps Stable, strategic focus
Design ServicesEmphasis; building capabilityRecord NPS; designer involvement doubles ticket, raises margin Continues to outperform; designer-led projects boost ticket/margin Strengthening lever
Connected Customer~18% penetration ~18% in Q4; digital upgrades 18.3% sales; improved weekly active users/design appointments Incremental progress
Macro/HousingDemand challenged; hurricanes supported Sequential comp improvement; existing home sales modestly up late 2024 Prudence on back half; Q2-to-date comps +1.1% Mixed, cautious
Store Openings Pace11 opened in Q3 10 opened; planned 25 for 2025 Plan reduced to 20; flexibility to cut further if needed Slower pace
DC ImpactN/ADCs to drag GM by 60–70 bps FY25 DC drag confirmed; Q1 impact ~30 bps, rising through year Known headwind ramping

Management Commentary

  • “We are pleased to deliver fiscal 2025 first quarter diluted earnings per share of $0.45... This result exceeded the low end of our first quarter earnings expectations, even though comparable store sales were at the lower end of our forecast.” — Tom Taylor, CEO .
  • “We successfully managed an increase in tariffs in 2018 and 2019... Today, we intend to employ similar strategies... We now intend to open 20 new stores instead of our prior expectation of 25 new stores in fiscal 2025.” — Tom Taylor, CEO .
  • “Our first quarter fiscal '25 gross profit rose by 8.1%... primarily due to lower supply chain costs.” — Bryan Langley, CFO .
  • “We believe we can maintain our margin rate... This go around, just given the impact, that's embedded within the guide.” — Bryan Langley, CFO (on tariffs) .
  • “Based on current market conditions... we anticipate our receipts from China to approximate mid- to low single digits... we placed our last purchase order from China for laminate and vinyl...” — Tom Taylor, CEO .

Q&A Highlights

  • Tariffs and margins: Management expects to offset universal tariffs via vendor negotiations and modest pricing; aim to maintain gross margin rate; reciprocal tariffs would affect 2026 more due to inventory turns .
  • Store openings: Reduced FY25 openings to 20; prepared to cut further if trends deteriorate below guidance low end; decision driven by prudence, not a hard threshold on existing home sales .
  • SG&A flexibility: ~30% of stores on minimum hours; ~$47M cost removed from comparable stores over six quarters; ability to flex labor/discretionary spend if needed .
  • Demand trends: Q2-to-date comps +1.1%, led by ticket; no evidence of trade-down; strength broadening beyond West .
  • DC impact cadence: 60–70 bps FY drag to gross margin; ~30 bps in Q1, increasing through year as facilities ramp .

Estimates Context

  • Q1 2025 vs S&P Global consensus: Revenue $1.1607B vs $1.1643B* (miss), EPS $0.45 vs $0.4477* (beat). EBITDA actual $123.6M vs consensus $129.3M* (below) .
  • Q2 2025 reported vs S&P Global consensus: Revenue $1.2142B vs $1.2089B* (beat), EPS $0.58 vs $0.5562* (beat). Values with asterisks retrieved from S&P Global.
MetricQ1 2025 ActualQ1 2025 Consensus*Surprise
Revenue ($USD Billions)$1.1607 $1.1643*Miss
Diluted EPS ($)$0.45 $0.4477*Beat
EBITDA ($USD Millions)$123.6 $129.3*Miss

Values marked with asterisks retrieved from S&P Global.

Key Takeaways for Investors

  • Margin resilience is the near-term anchor: gross margin expanded 100 bps on lower supply chain costs; management aims to keep GM rate neutral to universal tariffs via pricing/negotiations while DC drag is a known headwind .
  • Guidance reset lowers FY25 sales/comp/EPS and openings to 20; execution focus shifts to cost control, sourcing agility, and pricing discipline under tariff uncertainty .
  • Pro and design services remain strategic moats driving higher tickets/margins; connected customer initiatives are building engagement and appointments .
  • Sourcing diversification materially reduces China risk (mid–low single-digit receipts by FY25 exit), preserving assortment and pricing flexibility .
  • Watch Q2 trends: comps turned positive quarter-to-date with ticket leading; sustained improvement plus tariff clarity could drive estimate revisions and sentiment .
  • Balance sheet/liquidity robust ($949.8M unrestricted liquidity), supporting selective growth investments despite macro volatility .
  • Stock narrative likely driven by tariff path, existing home sales cadence, store-opening discipline, and ability to maintain margins while offsetting DC ramp headwinds .

Note: All consensus/estimate values marked with asterisks are retrieved from S&P Global.