Welcome to Floor & Decor fiscal 2025 third quarter earnings conference call. A reconciliation of each of these non-GAAP measures to the most directly comparable GAAP financial measure can be found in the earnings press release, which is available on our Investor Relations website at ir.flooranddecor.com. During today's conference call, Brad, Bryan, and I will discuss our third quarter earnings highlights. Before we get started, I want to share some exciting news that was announced this afternoon alongside our earnings release.
I am looking forward to transitioning into the role of Executive Chair of the Board, where I will focus on shaping our long-term strategic vision and unlocking new avenues for growth. I'm excited and honored to step into this role and lead our next phase of growth, scaling towards 500 warehouse-format stores and accelerating our commercial flooring distribution expansion. We are pleased to report fiscal 2025 third quarter diluted earnings per share of $0.53, a 10.4% increase over the prior year, prior year's $0.48. Total sales grew 5.5% to $1,180 million, while comparable store sales declined at 1.2% from the same period last year, approaching the low end of our expectations.
We're proud of our disciplined expense management and gross margin performance, which reflect a successful execution of our tariff mitigation strategies. We remain confident that existing home sales and demand for hard surface flooring will recover over time. We're playing the long game with discipline and intention as we build long-term earnings power. Year to date, through the third quarter, we opened 12 new locations and closed one, ending the period with 262 stores, a 9% increase from 241 stores in the same period last year.
| Metric | Period | Current guidance |
|---|---|---|
| New warehouse format store openings | FY2025 | 20 stores (on track) (unchanged) |
| New warehouse format store openings | FY2026 | 20 stores |
| Comparable store sales | Q4 FY2025 | expected to decline (lapping ~110 bps hurricane benefit) |
| Average ticket comp | Q4 FY2025 | essentially flat |
| Kitchen cabinet rollout | FY2025 | approximately 200 stores |
| Metric | YoY | Note |
|---|---|---|
| Diluted EPS | +10.4% to $0.53 | Disciplined expense management and gross margin performance despite soft demand. |
| Total sales | +5.5% to $1,180M | New store growth offsetting a 1.2% comparable store sales decline. |
| Comparable store sales | -1.2% | Transactions down 3% on weak housing demand and smaller projects, partially offset by average ticket up 1.8%. |
| Gross margin rate | -10 bps to 43.4% | Approximately 90 bps of distribution center cost pressure, partially offset by ~80 bps of favorable product margin. |
| Spartan Services sales | +13.3% | Growing presence in high-specification sectors partially offsetting multifamily softness. |
| Connected customer sales | +2% (18.8% of sales) | Average ticket growth while transactions remained under pressure. |
| Topic | Previous mention | Current period | Trend |
|---|---|---|---|
| CEO transition | Tom Taylor as CEO | Brad Paulsen appointed CEO effective fiscal 2026; Taylor to become Executive Chair | New |
| New store productivity | First-year sales target $14M-$16M | Recent classes averaging ~$11M, viewed as trough-level; pivoting to more tier-one and tier-two markets | Declining |
| New store construction cost | Fiscal 2023 class baseline | Fiscal 2025 class ~$1.5M lower than 2023; further improvement expected for 2026 | Improving |
| Housing/macro environment | Existing home sales weak | Mortgage rates above 6% and existing home sales around 4 million annualized; bouncing along the bottom | Stable/weak |
| Distribution center investment | Seattle opening | Seattle operating with ~90 bps gross margin pressure; second Baltimore DC still to ramp | Ongoing |