Gross Margin Outlook
Q: Are margins sustainable above 43%?
A: Management is encouraged by strong margins, noting that supply chain cost savings and efficient pricing support 43.3% margins with prospects for modest further improvement. "

2025 Store Openings & EPS
Q: How will 2025 openings affect EPS?
A: They plan to backload 2025 store openings—mostly in the second half—to favor stronger market conditions and improve operating leverage, though details on EPS growth remain early. "

Recovery Timeline & Comp Sales
Q: When will comps turn positive?
A: Management expects sequential comp improvement within a 0–3 month lag from rate cuts, with the high end of guidance requiring a more favorable housing environment. "

Unit Growth & Cannibalization
Q: Does slower growth reduce cannibalization?
A: Slower expansion (around 10% growth next year) should lessen cannibalization effects, aiding operating leverage by minimizing the drag from new-unprofitable stores. "

Competition & Pricing Trends
Q: How are competitors and pricing evolving?
A: While competitors face more pricing pressure in a weak market, Floor & Decor maintains strong price gaps and competitive advantages, keeping its pricing discipline intact. "

Store Sales vs 2019
Q: Why are some store sales below 2019 levels?
A: A challenging housing market with lower existing home sales and elevated home prices is compressing volume compared to 2019, though long‐term fundamentals remain intact. "

Store Format Strategy
Q: Do smaller formats hurt competitive edge?
A: Management believes smaller, cost-effective stores in less competitive markets preserve advantages such as broad assortments and operating margins comparable to larger formats. "

Immature Store Performance
Q: Are newer stores meeting performance expectations?
A: Newer stores, particularly those recently opened, are comping positive, while older cohorts lag; this “waterfall” effect underscores the differing performance across store maturities. "

Product Mix & Project Size
Q: Will project sizes return to pre-COVID levels?
A: As existing home sales normalize, management anticipates project sizes and mix improvements—especially in higher-ticket categories—to eventually rebound, boosting average ticket. "

Tariffs & Freight Impact
Q: How have tariffs and freight affected margins?
A: Diversification away from China has reduced tariff dependency, and improved freight contract terms have helped recapture margin previously lost, maintaining a healthy gross margin. "

Cash Flow & CapEx Impact
Q: How will lower capex and stable inventory affect FCF?
A: Reduced new store openings have lowered capex expenses, and while inventory may rise as growth normalizes, free cash flow is expected to improve as operating efficiencies take hold. "

ERP System Investment
Q: What benefits will the ERP upgrade bring?
A: The multi–year ERP upgrade targets core financial and merchandising systems with minimal near-term earnings impact while laying the groundwork for long-term operational improvements. "

Pro Customer Trends
Q: Are top pro customers outperforming?
A: The firm sees its top 20% of pro customers continuing to drive stronger sales and higher order frequency, outperforming the general homeowner segment. "