Floor & Decor Returned to Growth as Comparable Sales Improved
A $56.2 million tariff refund helped lift second-quarter gross margin to 48.2%.
Floor & Decor Holdings (FND), the specialty flooring retailer, returned to sales growth in the second quarter as its comparable-store decline narrowed through the period. Net sales rose 3.0% from a year earlier to $1.2503 billion, reversing the first quarter’s 0.7% decline.
The quarter marked an improvement from early in the year, though growth remained below the 5.5% and 7.1% rates recorded in the two preceding comparable quarters. Sales increased 8.5% sequentially, while comparable-store sales fell 2.1% after declining 3.7% in the first quarter. Comparable-store performance moved from a 5.1% decline in April to nearly flat in June.
GAAP net income rose 51.7% to $95.9 million, and diluted earnings increased 53.4% to $0.89 a share. Excluding tariff refunds and refinancing costs, adjusted net income slipped 0.3% to $63.0 million and adjusted earnings were unchanged at $0.58 a share.
The tariff refund accounted for much of the difference between the reported and adjusted results. GAAP operating income climbed 51.4% to $124.0 million, with operating margin expanding 310 basis points to 9.9%, after both measures weakened in the first quarter. Adjusted EBITDA rose 1.2% to $152.0 million, rebounding from a 6.4% first-quarter decline.
Floor & Decor raised its fiscal 2026 GAAP earnings forecast to $2.20 to $2.45 a share from $1.83 to $2.08, increasing each end by $0.37. It introduced adjusted earnings guidance of $1.88 to $2.13 a share and lifted its adjusted-EBITDA outlook by $5 million at both ends, to between $550 million and $585 million.
The sales outlook was unchanged despite the higher earnings forecast. Floor & Decor continues to expect fiscal 2026 revenue of $4.77 billion to $4.99 billion and comparable-store sales ranging from a 4% decline to flat. The company lowered planned capital spending to between $240 million and $275 million from $250 million to $300 million.
Floor & Decor ended the quarter with 281 warehouse stores, up from 257 a year earlier, after opening five locations during the period. It also repurchased $65.7 million of stock under the $400 million program announced with first-quarter results. First-half operating cash flow increased to $278.4 million as capital spending declined to $136.7 million, giving the company more cash generation as it continued expanding its store base.