Specialty flooring retailer Floor & Decor (NYSE: FND) met Wall Streets revenue expectations in Q3 CY2025, with sales up 5.5% year on year to $1.18 billion. The company’s outlook for the full year was close to analysts’ estimates with revenue guided to $4.69 billion at the midpoint. Its GAAP profit of $0.53 per share was 15.6% above analysts’ consensus estimates.
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Floor And Decor (FND) Q3 CY2025 Highlights:
- Revenue: $1.18 billion vs analyst estimates of $1.18 billion (5.5% year-on-year growth, in line)
- EPS (GAAP): $0.53 vs analyst estimates of $0.46 (15.6% beat)
- Adjusted EBITDA: $138.8 million vs analyst estimates of $138.2 million (11.8% margin, in line)
- The company reconfirmed its revenue guidance for the full year of $4.69 billion at the midpoint
- EPS (GAAP) guidance for the full year is $1.92 at the midpoint, beating analyst estimates by 7.2%
- EBITDA guidance for the full year is $537.5 million at the midpoint, above analyst estimates of $532.1 million
- Operating Margin: 6.1%, in line with the same quarter last year
- Free Cash Flow Margin: 2.1%, down from 3.3% in the same quarter last year
- Locations: 262 at quarter end, up from 241 in the same quarter last year
- Same-Store Sales rose 1.2% year on year (-6.4% in the same quarter last year)
- Market Capitalization: $7.44 billion
Tom Taylor, Chief Executive Officer, stated, “We are pleased to report third quarter diluted earnings per share of $0.53, a 10.4% increase from $0.48 in the same period last year. This result exceeded the high end of our guidance and marks our second consecutive quarter of double-digit EPS growth, a testament to our operational discipline amid persistently soft demand in the hard surface flooring industry.”
Company Overview
Operating large, warehouse-style stores, Floor & Decor (NYSE: FND) is a specialty retailer that specializes in hard flooring surfaces for the home such as tiles, hardwood, stone, and laminates.
Revenue Growth
Reviewing a company’s long-term sales performance reveals insights into its quality. Any business can put up a good quarter or two, but the best consistently grow over the long haul.
With $4.66 billion in revenue over the past 12 months, Floor And Decor is a small retailer, which sometimes brings disadvantages compared to larger competitors benefiting from economies of scale and negotiating leverage with suppliers. On the bright side, it can grow faster because it has more white space to build new stores.
As you can see below, Floor And Decor grew its sales at an impressive 15.6% compounded annual growth rate over the last six years (we compare to 2019 to normalize for COVID-19 impacts) as it opened new stores and expanded its reach.
This quarter, Floor And Decor grew its revenue by 5.5% year on year, and its $1.18 billion of revenue was in line with Wall Street’s estimates.
Looking ahead, sell-side analysts expect revenue to grow 6.9% over the next 12 months, a deceleration versus the last six years. Still, this projection is commendable and implies the market is forecasting success for its products.
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Store Performance
Number of Stores
Floor And Decor operated 262 locations in the latest quarter. It has opened new stores at a rapid clip over the last two years, averaging 13.5% annual growth, much faster than the broader consumer retail sector. This gives it a chance to scale into a mid-sized business over time.
When a retailer opens new stores, it usually means it’s investing for growth because demand is greater than supply, especially in areas where consumers may not have a store within reasonable driving distance.
Same-Store Sales
The change in a company's store base only tells one side of the story. The other is the performance of its existing locations and e-commerce sales, which informs management teams whether they should expand or downsize their physical footprints. Same-store sales is an industry measure of whether revenue is growing at those existing stores and is driven by customer visits (often called traffic) and the average spending per customer (ticket).
Floor And Decor’s demand has been shrinking over the last two years as its same-store sales have averaged 4.7% annual declines. This performance is concerning - it shows Floor And Decor artificially boosts its revenue by building new stores. We’d like to see a company’s same-store sales rise before it takes on the costly, capital-intensive endeavor of expanding its store base.
In the latest quarter, Floor And Decor’s same-store sales rose 1.2% year on year. This growth was a well-appreciated turnaround from its historical levels, showing the business is regaining momentum.
Key Takeaways from Floor And Decor’s Q3 Results
It was good to see Floor And Decor beat analysts’ EPS expectations this quarter. We were also glad its full-year EBITDA guidance slightly exceeded Wall Street’s estimates. On the other hand, its gross margin was in line. Overall, this print had some key positives. The stock traded up 6.2% to $69.05 immediately after reporting.
Big picture, is Floor And Decor a buy here and now? The latest quarter does matter, but not nearly as much as longer-term fundamentals and valuation, when deciding if the stock is a buy. We cover that in our actionable full research report which you can read here, it’s free for active Edge members.
