Floor & Decor Says Quarter-To-Date Comps Are Down About 3.8% After A Positive September
CEO Brad Paulsen blamed mortgage rates near 7.5% and fuel costs, and the CFO would not commit to a 2027 gross margin.
Floor & Decor, the specialty retailer of hard surface flooring, said on its third-quarter earnings call Thursday that comparable store sales are down about 3.8% so far in the fourth quarter, erasing September's 0.4% gain, the company's first positive month since January 2026.
A turn in October
Third-quarter comparable sales fell 1.4%, better than the 2.1% decline in the second quarter and the 3.7% decline in the first. By month, July fell 2.3% and August 2.6% before September's 0.4% rise.
CEO Brad Paulsen said the business felt "changing macro conditions" as it moved from September into October. He listed 30-year mortgage rates hovering up to nearly 7.5% at one point, pressured existing home sales, fuel costs and lower consumer sentiment.
Asked by a Morgan Stanley analyst whether demand has bottomed, Paulsen called it "a tough question to answer" and said the company will "control what we can control."
Margin questions for 2027
CFO Bryan Langley said supply chain costs cut third-quarter gross margin by about 100 basis points, or one percentage point, and that fourth-quarter pressure could run 120 to 140 basis points, mostly from diesel. Diesel costs are "not unique to us" and "not structural either," he said.
A UBS analyst argued that loyalty-program drag, lapping this year's tariff refunds and supply chain inflation should outweigh offsets, and asked why 2027 gross margin should not be modeled lower. Langley said planning is early and the company will give a 2027 gross margin outlook with fourth-quarter results.
The refunds gave the company room in 2026 to absorb freight costs and invest in pricing, Langley said, but other levers must replace them as the year ends. He named strategic pricing, higher-margin better-and-best products, supply chain efficiencies and less shrink and damage.
Third-quarter gross margin was 43.7%, up 30 basis points. Adjusted earnings guidance was narrowed, with full-year adjusted gross margin expected at about 43.6% and comparable sales down 2.0% to 3.5%.
Loyalty launch and slower openings
The Pro Loyalty program, for professional installers, is in a pilot in three markets and is on track for a national launch in the first quarter of 2027. Paulsen said it should be a slight headwind to gross margin but add to operating income, and that benefits should reach the income statement at some point in 2027, though he would not commit to when.
The company also plans 10 to 15 new warehouse stores in 2027, after 20 this year. Paulsen called it a pacing decision and said the company remains committed to 500 stores.
Floor & Decor operated 270 warehouse-format stores across 39 states as of December 25, 2025. It reported third-quarter diluted earnings of $0.61 a share, up 15% from $0.53.
The next marker is the fourth-quarter report, when Langley said the company will give its 2027 gross margin outlook.
Sources
- Floor & Decor Holdings Non-GAAP EPS of $0.61 beats by $0.04, revenue of $1.22B in-line (FND:NYSE) | Seeking Alpha — seekingalpha.com
- Floor & Decor cut to hold at Stifel as housing outlook dims (FND:NYSE) | Seeking Alpha — seekingalpha.com
- Floor & Dcor: Q3 Earnings Snapshot — Associated Press
- Floor & Decor Holdings, Inc. (FND) Stock Price, News, Quote & History - Yahoo Finance — Yahoo Finance
- Floor & Decor Holdings, Inc. Announces Third Quarter Fiscal 2026 Financial Results – Company Announcement - FT.com — Financial Times
