Q2 2026 Floor & Decor Holdings Inc Earnings Call Transcript
Key Points
- Adjusted diluted EPS of $0.58 was flat year-over-year despite a 2.1% decline in comparable store sales, demonstrating the resilience of the operating model.
- Comparable store sales improved sequentially throughout the quarter, from a 5.1% decline in April to a 0.3% decline in June, indicating a positive trend.
- Sales to Pros grew approximately 4% year-over-year and accounted for 55% of total sales, with installation materials delivering strong growth.
- The company received a $45.2 million net pre-tax benefit from IEPA tariff refunds, providing flexibility to offset inflation and invest in pricing to gain market share.
- Strong free cash flow generation enabled the repurchase of $65.7 million in common stock during the quarter, with $334.3 million remaining under the authorization.
- Online sales penetration reached 20.3% of total sales, up from 18.6% in the prior year, reflecting progress in the omnichannel strategy.
- The company opened 11 new warehouse stores in the first half of 2026, with the front-loaded cadence progressing in line with expectations.
- Comparable store sales declined 2.1% in the second quarter, driven by continued softness in large discretionary flooring projects.
- Demand softened around the 4th of July holiday period, with third quarter-to-date comparable store sales declining 2.2%.
- The vinyl flooring category continues to face pressure from slowing demand and excess industry supply, which could persist into 2027.
- Housing market activity remains constrained, with existing home sales near historically low levels of approximately 4 million annualized units.
- SG&A expenses increased 6.3% year-over-year, deleveraging 120 basis points as a percentage of sales, partly due to one-time costs related to IEPA tariff refunds.
- The company maintained a wide comparable store sales guidance range of flat to down 4% for fiscal 2026, reflecting ongoing macroeconomic uncertainty.
- Adjusted gross margin declined 20 basis points year-over-year to 43.7%, within the expected range but still under pressure.
Greetings and welcome to the Floor & Decor Holdings second quarter 2026 conference call. At this time, all participants are in a listen-only mode.
A question-and-answer session will follow the formal presentation. If anyone should require operator assistance, please press *0 on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce Wayne Hood, Senior Vice President of Investor Relations.
Please go ahead.
Thank you, operator, and good afternoon, everyone. Welcome to Florence Decor's Fiscal 2026 Second Quarter Earnings Conference Call.
Joining me today are Brad Paulson, Chief Executive Officer and Brian Langley, Executive Vice President and Chief Financial Officer. Before we begin, I want to remind everyone of the company's safe harbor language. Comments made during this call contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act. Of 1,995.
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