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    FND
    Earnings call· Jun 2026(Q2 FY26)

    Floor & Decor Holdings Q2 FY26 earnings call FND

    Jul 30, 2026 Source

    Executive summary

    Floor & Decor Q2 FY26 — Strong EPS and Market Share Gains Amidst Choppy Demand

    Floor & Decor delivered flat adjusted EPS in Q2 FY26, demonstrating resilience through disciplined expense management and strategic initiatives despite a 2.1% comparable store sales decline. The company saw sequential improvement in sales trends, driven by strong Pro performance and digital engagement, and is leveraging tariff refunds to offset inflation and selectively invest in pricing. Management remains focused on market share acceleration amidst a challenging and uncertain macroeconomic environment.

    Highlights

    5

    • Adjusted diluted EPS of $0.58, unchanged year-over-year despite comparable store sales decline.

    • Total sales increased 3% to $1,250.3 million.

    • Sales to Pros grew approximately 4% and accounted for about 55% of total sales.

    • Comparable store sales improved sequentially, declining 2.1% in Q2 compared to 3.7% in Q1, with June declining only 0.3%.

    • Generated strong free cash flow and repurchased $65.7 million in common stock.

    Concerns

    5

    • Comparable store sales declined 2.1% due to continued softness in large discretionary flooring projects.

    • Demand softened around the 4th of July holiday period, with Q3-to-date comparable store sales declining 2.2%.

    • Laminate and vinyl flooring category continues to face pressure from slowing demand and excess industry supply, expected to continue into 2027.

    • SG&A as a percentage of sales deleveraged 120 basis points to 38.3%.

    • Housing market remains constrained by subdued existing home sales activity, near historically low levels of approximately 4 million annualized units.

    Guidance & targets

    14
    CategoryTargetConfidence
    Full-year 2026 Sales
    $4.770 billion to $4.990 billion
    high materiality
    High
    Full-year 2026 Comparable Store Sales
    flat to down 4%
    high materiality
    High
    Full-year 2026 Comp Average Ticket
    flat to up low single digits
    medium materiality
    High
    Full-year 2026 Comp Transactions
    down low to mid-single digits
    medium materiality
    High
    Full-year 2026 Adjusted Gross Margin
    approximately 43.6% to 43.8%
    high materiality
    High
    Full-year 2026 SG&A as a percentage of sales
    approximately 38%
    medium materiality
    High
    Full-year 2026 Interest Income/Expense Net
    approximately 0
    low materiality
    High
    Full-year 2026 Tax Rate
    approximately 23%
    low materiality
    High
    Full-year 2026 Depreciation and Amortization
    approximately $250 million
    low materiality
    High
    Full-year 2026 Adjusted EBITDA
    approximately $550 million to $585 million
    high materiality
    High
    Full-year 2026 Diluted Earnings Per Share
    approximately $2.20 to $2.45
    high materiality
    High
    Full-year 2026 Adjusted Diluted Earnings Per Share
    approximately $1.88 to $2.13
    high materiality
    High
    Full-year 2026 Diluted Weighted Average Shares Outstanding
    approximately 107 million shares
    low materiality
    High
    Full-year 2026 Capital Expenditure
    approximately $240 million to $275 million
    medium materiality
    High

    Segment performance

    1
    SegmentRevenueYoYQoQMargin
    Spartan Surfaces
    The second quarter represented an early inflection point for the business with results improving sequentially from the first quarter and momentum building throughout the period. Driven by strong shipment activity from the conversion of backlog. June was one of the strongest months for written sales in the company's history. Customer backlogs are beginning to recover from the lows experienced in the second half of 2025. Average quoted project value increased, leading to a very strong project backlog at the end of the second quarter.
    		increased 2% year-over-year2%——

    Operational metrics

    32
    Adjusted Diluted EPS
    $0.58unchanged from prior year period
    Q2 FY26
    Total Sales
    $1,250.3 millionincreased 3% from prior year period
    Q2 FY26
    Sales to Pros
    4%grew from same period last year
    Q2 FY26

    Pros continued to outperform the company.

    Comparable Transactions
    -2.9%declined compared with 5.5% decline in Q1 FY26
    Q2 FY26
    Average Ticket
    0.8%grew year-over-year despite lapping 3.8% growth in prior year
    Q2 FY26
    Online Sales Penetration
    20.3%up from 18.6% in prior year period and up 110 basis points from Q1 FY26
    Q2 FY26
    Regional Commercial Account Managers
    80
    Q2 FY26

    Focus shifting from adding RAMs to increasing productivity.

    IEEPA Tariff Refunds Gross Profit Benefit
    $56 millionone-time benefit
    Q2 FY26

    Related to inventory previously sold through.

    IEEPA Tariff Refunds Inventory Reduction
    $28 million
    Q2 FY26

    Reduction to inventory for product still on hand, benefit to be recognized as inventory sells through.

    IEEPA Tariff Refunds Q2 Flow-through from Inventory
    $6 million
    Q2 FY26

    Benefit recorded in Q2 gross profit from the sell-through of reduced inventory, used to offset inflationary headwinds.

    Net Pretax Benefit from IEEPA Tariff Refunds
    $45.2 million
    Q2 FY26

    Affected gross margin, SG&A, and interest income.

    Loss on Debt Extinguishment
    $1.3 millionpretax
    Q2 FY26

    Associated with the refinancing of credit facilities.

    Net After-Tax Benefit (Tariff + Debt Extinguishment)
    $32.9 million
    Q2 FY26

    Collective benefit from IEEPA tariff refunds and loss on debt extinguishment.

    Adjusted Gross Profit
    $14.3 millionincreased 2.7% compared to same period last year
    Q2 FY26
    Adjusted Gross Margin
    43.7%decrease of 20 basis points year-over-year
    Q2 FY26

    Within the range of expected outcomes.

    SG&A Expenses
    $28.3 millionincreased 6.3% in Q2 FY26 compared with prior year period
    Q2 FY26

    Driven primarily by 24 stores opened since Q2 FY25 and higher incentive compensation related to IEEPA tariff refunds.

    SG&A for Noncomparable Stores
    $26.7 millionincreased
    Q2 FY26
    SG&A for Comparable Stores
    $13.7 milliondeclined
    Q2 FY26

    Reflecting ongoing focus on expense management and productivity initiatives.

    SG&A Deleverage
    120year-over-year
    Q2 FY26
    Adjusted EBITDA
    $152.0 millionincreased 1.2% from same period last year
    Q2 FY26
    Adjusted EBITDA Margin
    12.2%compared with 12.4% in prior year period
    Q2 FY26
    Net Interest Income
    $2.3 millioncompared to net interest expense of $1.1 million in same period last year
    Q2 FY26

    Primarily driven by a one-time benefit of approximately $2.8 million in statutory interest on IEEPA refunds, along with higher interest income from larger cash balances.

    Statutory Interest Benefit on IEEPA Refunds
    $2.8 millionapproximately
    Q2 FY26
    Effective Tax Rate
    23.3%up from 21.8% in same period last year
    Q2 FY26

    Primarily due to a decrease in federal tax credits.

    Adjusted Effective Tax Rate
    22.3%
    Q2 FY26
    Unrestricted Liquidity
    $942.4 million
    Q2 FY26 end

    Consisting of cash and cash equivalents and available capacity under ABL Facility.

    Cash and Cash Equivalents
    $320.6 million
    Q2 FY26 end
    Available ABL Capacity
    $621.8 million
    Q2 FY26 end
    Cash Provided by Operating Activities
    $278.4 millioncompared with $155.3 million in prior year period
    26 weeks ended June 25, 2026
    Net Cash Used in Investing Activities
    $136.7 million
    26 weeks ended June 25, 2026
    Total Inventory
    $1.1 billionincreased 0.7% compared with December 25, 2025
    Q2 FY26 end

    Reflects progress on working capital and inventory productivity initiatives.

    Existing Home Sales
    4 millionnear historically low levels
    June

    Housing market remains constrained.

    Industry KPIs

    7
    MetricValueDetails
    Sg a OPEX ratio38.3%%
    Comparable sales-2.1%%
    Store count growth11stores
    Gross margin drivers43.7%%
    Pro vs diy performance4%%
    Share buyback capital return$65.7 millionUSD
    Inventory position markdown risk$1.1 billionUSD

    Product announcements

    1
    ProductTypeDetails
    NatureMatchlaunch

    Deals & partnerships

    1
    Not applicable (internal refinancing)Refinancing of credit facilities to strengthen balance sheet and enhance financial flexibility.New $200M term loan facility; new $800M ABL FacilityTerm loan maturing June 2033; ABL maturing June 2031

    Entered into a new $200 million term loan facility maturing June 2033 and used proceeds to repay remaining $197.1 million outstanding under prior facility (scheduled to mature February 2027). Entered into a new $800 million ABL Facility maturing June 2031, replacing current facility (scheduled to mature August 2027).

    Risks & headwinds

    5
    Continued softness in large discretionary flooring projectsRemainder of fiscal 2026

    Comparable store sales declined 2.1% in Q2 FY26. Q3-to-date comparable store sales declined 2.2%.

    Mitigation: Focus on factors within control: compelling value, customer experience, merchandising, operational initiatives, disciplined expense management.

    Pressure in laminate and vinyl flooring categoryExpected to continue into 2027

    Category experiencing downward pressure due to excess supply in the market.

    Mitigation: Merchandising, pricing, and value-focused initiatives; aggressive opportunity buys, new SKUs.

    Housing market constraintsRemainder of fiscal 2026

    Subdued existing home sales activity, near historically low levels of approximately 4 million annualized units.

    Mitigation: Outlook assumes cautious consumers, focus on market share gains through initiatives.

    Potential changes in tariffsOngoing

    Not quantified for future impact, but current IEEPA tariff refunds provided $45.2 million net pretax benefit.

    Mitigation: Leveraging tariff refunds to offset inflationary impacts, selectively invest in price.

    Increased SG&A as a percentage of salesQ1 and Q4 FY26 expected to be most pressured from new stores

    SG&A deleveraged 120 basis points to 38.3% in Q2 FY26.

    Mitigation: Ongoing focus on expense management and productivity initiatives.

    What to watch in Q3 FY26

    5

    Comparable Store Sales Trend

    Next quarter (Q3 FY26 results)
    CurrentQ3-to-date -2.2%, with improvement late July/early August
    TargetContinued sequential improvement, moving towards midpoint of flat to -4% full-year guidance

    Why it matters

    Indicates whether the demand environment is stabilizing and if the company's initiatives are effectively driving market share gains.

    As a result, third quarter-to-date comparable store sales declined 2.2%. Encouragingly, sales trends improved in late fiscal July and early fiscal August.

    Q&A highlights

    6

    What is the full-year tariff refund benefit, and how are the funds being deployed to impact Q2/Q3 performance and the June improvement?

    The company filed for $87M in IEEPA tariff refunds, receiving substantially all of it. $56M was a one-time gross profit benefit for previously sold inventory, and $28M was a reduction to inventory for product on hand, with $6M of that flowing through in Q2. Funds are used to offset inflation, selectively invest in pricing for market share, and for capital allocation (stores, growth, share repurchase).

    “We'll continue to use those funds to offset the inflationary impacts from both oil and supply chain. Number two, where it makes sense and making sense means where we see elasticity, we'll selectively invest in price to drive market share gains.”

    asked by Seth Sigman · answered by Bradley Paulsen

    2 min read7 chapters

    Detailed Narrative

    01

    Q2 Performance and Sequential Improvement

    Floor & Decor reported Q2 FY26 adjusted diluted EPS of $0.58, flat year-over-year, on total sales of $1,250.3 million, up 3%. Comparable store sales declined 2.1%, an improvement from the 3.7% decline in Q1, with trends improving sequentially from -5.1% in April to -0.3% in June. This improvement was driven by high Net Promoter Scores, better customer conversion, and improved comparable transactions.

    02

    Pro Customer Outperformance

    Sales to Pros continued to outperform the company, growing approximately 4% year-over-year and accounting for about 55% of total sales. The company's focus on Pro initiatives, including installation materials, tile, and wood categories, contributed to this strength. The expansion of Regional Commercial Account Managers (RAMs) to 80 associates further supports Pro engagement, with a shift in focus to increasing their productivity.

    03

    Tariff Refunds and Strategic Allocation

    The company recognized a $45.2 million net pretax benefit from IEEPA tariff refunds, including a $56 million one-time📎 gross profit benefit for previously sold inventory and a $28 million reduction to inventory for product still on hand. These funds are being strategically deployed to offset inflationary impacts from oil and supply chain, selectively invest in pricing for market share gains, and support capital allocation priorities like new stores and growth initiatives.

    04

    Omnichannel and Digital Transformation

    Online sales penetration reached 20.3% of total sales, up from 18.6% in the prior year and 110 basis points from Q1. The company is undertaking a comprehensive 18-24 month transformation to enhance digital capabilities and create a seamless omnichannel experience. This includes the planned launch of a new Pro app next year, designed to integrate purchasing, loyalty, rewards, pricing, and project management capabilities.

    05

    Laminate and Vinyl Category Headwinds

    The laminate and vinyl flooring category, the company's second-largest, continues to experience downward pressure due to slowing demand and excess industry supply, which is expected to persist into 2027. Despite this, the company saw sequential improvement in the category through aggressive pricing, opportunity buys, and new SKUs, including the launch of the NatureMatch private label collection.

    06

    New Store Expansion and Format

    Floor & Decor opened 11 new warehouse format stores in H1 FY26, including 5 in Q2, representing 55% of the planned 2026 locations. The new stores average approximately 55,000 square feet, a smaller format designed to enter higher-density markets without sacrificing sales productivity. The balance of 2026 openings is weighted towards Q4.

    07

    Spartan Surfaces Momentum

    Spartan Surfaces, the commercial business, showed an early inflection point in Q2 with sales increasing 2% year-over-year. This growth was driven by strong shipment activity from the conversion of backlog. June saw strong written sales, and a robust project backlog at quarter-end provides visibility for continued improvement in the second half of the year, despite mixed commercial end markets.

    AI-generated summary of the company’s earnings call. Not investment advice.