Floor & Decor's Q2 2025 Earnings Call: Unpacking Contradictions in Tariffs, Pricing, and Expansion Plans

Tariff impact and pricing strategy, flow-through and earnings growth, price strategy and market share, store opening plans are the key contradictions discussed in Floor & Decor Holdings, Inc.'s latest 2025Q2 earnings call.



Sales and Earnings Growth:
- Floor & Decor Holdings reported a 7.1% increase in sales for the second quarter, reaching $1.214 billion.
- The company's diluted earnings per share increased by 11.5% to $0.58, marking a 0.4% increase in comparable store sales.
- This growth was driven by effective cost management, strategic pricing, and a focus on better and best product categories.

Store Expansion and Regional Performance:
- Floor & Decor opened 7 new warehouse format stores in the fiscal year to date, with 257 locations in total, representing an approximate 12% increase from the previous year.
- The West division outperformed the company's average, contributing to the overall comparable store sales increase.
- The expansion was strategic, targeting large and mid-sized existing markets, with plans to open at least 20 stores in fiscal 2025.

Impact of Tariffs and Pricing Strategy:
- The company's pricing strategy aimed at mitigating the impact of tariffs, with notable price increases in the second quarter despite moderation in tariff exposure.
- The focus on balancing the portfolio approach and maintaining everyday low prices was crucial in enhancing market position and reinforcing brand value.
- This strategy leveraged a diverse range of product assortments and inventory management to offset tariff-induced cost pressures while maintaining competition with independent retailers.

Design Services and Pro Customer Performance:
- Connected customer sales rose by 2% year-over-year, contributing to approximately 19% of total sales.
- Professional sales accounted for about 50% of sales, outperforming the company's overall growth, with an increase in both transactions and average ticket size.
- The focus on design services, personalized customer engagement, and education initiatives led to higher customer transactions and gross margin rates, driving profitability and growth.