FND

Floor & Decor is a differentiated specialty retailer of hard-surface flooring, operating 270 warehouse-format stores with a strong everyday-low-price, broad-assortment model and a 43.6% gross margin. The franchise quality is high and management keeps investing through the cycle — it opened 20 net new stores in FY2025 and a new Seattle distribution center. FY2025 revenue grew 5.1% to $4.68B and net income edged up 1.3% to $209M, with Adjusted EBITDA of $538M.

The headwind is the housing market. The MD&A is candid that 'elevated interest rates and higher home prices' and 'low existing home sales' drove a slowdown, producing comparable store sales of -1.8% (an improvement from -7.1% in FY2024 but still negative). Operating margin is thin at 5.8% and net margin 4.5%, and the newest store classes are achieving lower first-year sales and returns than pre-2022 vintages. Operating cash flow fell 36.7% to $382M as the company invested in inventory and growth, though it remains solidly profitable with low leverage (1.27x) and growing equity (+11.0%).