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    Floor & Decor Holdings (FND)

    FND Q3 2024: Plans 25 New Stores Amid 5% Margin Drag

    Reported on Jun 17, 2025 (After Market Close)
    Pre-Earnings Price$100.88Last close (Oct 30, 2024)
    Post-Earnings Price$105.84Open (Oct 31, 2024)
    Price Change
    $4.96(+4.92%)
    • Continued Store Expansion: The company remains committed to opening 25 new stores in fiscal 2025, providing scale and growth potential while maintaining the flexibility to adjust timing based on market conditions.
    • Enhanced Operational Efficiency: Cost reduction efforts, including lowered CapEx and operating expenses for new stores alongside improved gross margin performance from favorable supply chain dynamics, contribute to stronger profitability.
    • Positive Regional Sales Trends: Early signs of improvement in the West Coast market—with existing home sales showing a 5% increase in September—suggest regional tailwinds that could drive future demand.
    • Margin Pressure from New Store Openings: Executives noted that new store openings are generating cannibalization and dragging operating margins, which could hinder near-term profitability.
    • Macroeconomic and Housing Market Uncertainties: The discussion highlighted concerns about a challenging macro environment—including weak existing home sales and subdued customer traffic—which may delay a full recovery in sales.
    • Uncertain Hurricane Rebuild Benefits: Q&A responses emphasized the unpredictable impact of recent hurricanes with ongoing store closures and recovery efforts, suggesting that the benefits from rebuilding may be slower to materialize.
    1. Margin Impact
      Q: How do new stores affect margins?
      A: Management explained that the current operating margin of around 5% is partly weighed down by new store openings, but continued cost discipline and improved comps should ease the drag over time.

    2. West Coast Performance
      Q: Are West Coast comps improving?
      A: Management noted that West Coast stores are outperforming the chain average, with early signs of improvement related to positive existing home sales trends in that region.

    3. Transaction Trends
      Q: How are per store transactions vs 2019?
      A: Despite some cannibalization from new openings, per store transactions remain roughly flat compared to 2019, while higher average tickets help maintain revenue levels.

    4. Cost Efficiency
      Q: How have new store costs been trimmed?
      A: The company has significantly reduced capex and operating costs through rightsizing and efficiency measures, helping to safeguard ROIC even in a challenging macro environment.

    5. Freight Costs
      Q: How will rising freight rates affect 2025?
      A: With most freight rates locked in on long-term contracts, any increases are expected to be largely passed along later, meaning minimal impact on fiscal performance in the near term.

    Research analysts covering Floor & Decor Holdings.