Welcome to Floor & Decor's fiscal 2026 first 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. Before I turn to our first quarter earnings, I'd like to discuss our capital allocation framework and the actions we announced today. Consistent with our disciplined capital allocation framework, we announced that our board of directors has authorized a share repurchase program for up to $400 million of the company's outstanding common stock.
As we continue to expand our store base, we are optimizing our capital spend per location, which should drive strong returns, enabling us to both fund growth and generate meaningful excess cash flow. This positions us to flex our pace of openings over time while returning capital to shareholders, all while supporting our long-term opportunity to operate 500 warehouse format stores across the United States. The repurchase program is a natural extension of our capital allocation philosophy, which prioritizes capital allocation based on returns that exceed our weighted average cost of capital. We continue to invest in our commercial flooring platforms and new growth concepts, including our outdoor and unfinished flooring offerings.
Once these priorities are met, we intend to return excess capital to shareholders in ways that are designed to enhance long-term value while maintaining a strong balance sheet. store opportunity built out and a large under-penetrated opportunity in commercial flooring, we believe we have a substantial runway for growth ahead. These dynamics resulted in first quarter earnings coming in weaker than we anticipated. For the quarter, we delivered diluted earnings per share of $0.37 compared to $0.45 in the same period last year.
| Metric | Period | Current guidance |
|---|---|---|
| Diluted EPS | FY2026 | lowered by approximately $0.10 to $0.15 (lowered) |
| Gross margin rate | FY2026 | 43.6% to 43.8% (low end raised) |
| Average ticket comp | FY2026 | flat to up low single digits |
| Transaction comp | FY2026 | down low single digits to down mid-single digits |
| New warehouse format store openings | FY2026 | 20 stores (committed) (unchanged) |
| Comparable store sales cadence | FY2026 | low end has Q3 as high quarter; high end assumes sequential improvement through the year |
| Metric | YoY | Note |
|---|---|---|
| Diluted EPS | -$0.08 to $0.37 | Weaker-than-anticipated demand, adverse weather, and expense deleverage on the comp decline. |
| Total sales | -0.7% to $1,152M | Comparable store sales decline of 3.7% partially offset by new stores. |
| Comparable store sales | -3.7% | Transactions down 5.5% (150-200 bps from weather), partially offset by average ticket up 1.9%. |
| Gross margin rate | +20 bps to 44.0% | Timing benefit of strategic pricing initiatives, partially offset by higher supply chain costs and ~60 bps of distribution center pressure. |
| SG&A | +2.5% to higher dollars (deleverage ~120 bps to 39.5%) | 22 new stores opened since Q1 2025; comparable store SG&A decreased $9.0 million. |
| Operating income | -18.4% to $52.4M | New store impact and expense deleverage from the 3.7% comp decline. |
| Adjusted EBITDA | -6.4% to $121.5M | Lower sales and margin deleverage. |
| Topic | Previous mention | Current period | Trend |
|---|---|---|---|
| Capital allocation / buyback | Invest in stores and growth concepts | Same priorities plus a new up to $400 million discretionary share repurchase using excess cash, no incremental debt | New |
| Laminate and vinyl | Pressured, customers trading down | Continued pressure, primarily vinyl; sub-$2 value offers and 20+ in-stock styles introduced to capture shifting demand | Declining |
| Macro / consumer | Cautious consumer | Consumer Sentiment 53.3 near lows, elevated mortgage rates, higher gas prices, Middle East tensions; existing home sales 3.98 million | Weakening |
| Smaller-format stores | Larger 75,000-80,000 sq ft boxes | 2026 class averaging 55,000 sq ft to densify urban markets without sacrificing assortment or experience | Changing |
| Pro loyalty revamp | In development | Led by new Chief Customer Officer Krystal Zell; differentiated program targeting service, assortment, and price for Q1 2027 rollout | Ongoing |
| Tariffs and input costs | Minimal 2025 impact | Modest tariff impact starting; ocean contracts being renegotiated with back-half flow-through; PVC exposure minimal so far | Building |