Floor & Decor – Macro policy leading to fewer store openings

By Thomas Paulson, Head of Market Insights

Floor & Décor Holdings Q1 results showed stability in earnings despite a challenging housing market. However, those challenges combined with the added pressures from tariffs led management to reduce its store openings plan for 2025 from 25 to 20. CEO Tom Taylor said, “If economic conditions worsen from our current expectations, we have the ability to further reduce fiscal 2025 openings.” On the outlook, Taylor said, “This is a bit of unprecedented times. … We are going to control what we can control. It's very difficult to predict consumer demand in the back half of the year. I feel like our stores, our assortment, our service, the way we're executing is as high as it's ever been. … I like the trends that we're seeing today, but I don't know what's going to happen in the back half. There are things that are out of our control,” [i.e. trade and macro policy].

On tariffs, Taylor said, “We successfully managed an increase in tariffs back in 2018 and 2019 by pursuing strategies to grow our market share and protect our profitability. Today, we intend to employ similar strategies to achieve these goals in 2025 and beyond. That said, unlike in 2018 and 2019, we believe managing today's tariffs uncertainty and complexity at scale and speed could be more challenging for some competitors in the hard surface flooring industry. To address this increased complexity, we have organized a Tariff Steering Committee… Following the U.S. announcement of a 90-day pause on all reciprocal tariffs excluding China, we expedited purchase orders to maximize the likelihood they arrive before the end of the pause on July 9, 2025. .. [2nd] we have the strategic option to thoughtfully widen our price gaps further, reinforcing our everyday low price value proposition against independents and to grow our market share. We have already observed some retailers and distributors communicate price increases of high single digits to as much as 50%.... [3rd] we will continue to effectively implement our sourcing diversification strategies to find the highest-quality products at the lowest possible price for both our homeowner and professional customers. Our scale and worldwide direct sourcing model, which involves over 240 vendors in 26 countries, provide us with flexibility and a competitive advantage, particularly compared to independent flooring retailers and distributors… The United States is now our largest country of manufacturer, accounting for approximately 27% of the products we sold in fiscal 2024, up from approximately 20% in fiscal 2018. Turning to China… Based on current market conditions and the universal tariffs that are in place, we anticipate our receipts from China to approximate mid- to low single digits of our total receipts as we exit …2025.“

Sales grew by +5.8% for the quarter, driven by new store openings, as comp sales decreased -1.8%. The decline was primarily due to weak DIY sales (-11%), reflecting softness in the housing and big-ticket home improvement markets. Offsetting that weakness were strong Pro sales (+18%) and our estimated +10% increase in Pro comp-transactions - similar to the rate in Q4. On the Pro business, President Brad Paulsen said, “These results continue to demonstrate that our supply house approach is effective, focusing on engagement and nurturing strong relationships with pros. We are focused on speed and accuracy in the load-out process and ensuring we have the best support at the Pro desk… To attract new Pros, we are building brand awareness with our pro marketing blitzes and tools to generate leads and contacts. Marketing and awareness strategies include e-mail campaigns to drive awareness of new products. We continue to benefit from partnering with advertising platforms that provide a practical and cost-efficient way to attract and retain new Pros… We also continue to benefit from our Pro service managers, spending more time outside our stores and in new zip codes where they directly engage with Pros…” Business strengthened in April as shown in the chart below (the monthly comp improved by 300 bps). That lift was likely a pull-forward effect on tariff fears and one can see that it has already begun to fade.

FND traffic

Thomas has been Head of Market Insights for Advan Research since January 2025. Previously, he served as Director of Research and Business Development at Placer.ai, where he was instrumental in providing actionable insights derived from location analytics and the path for expansion into new verticals. His extensive background also includes two decades as a Wall Street analyst and portfolio manager in asset management at Alliance Bernstein, Cornerstone, and others. Linkedin profile.

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Advan is the leader in the financial and real estate industries, enabling participants to analyze foot traffic data across multiple sectors, including retail, hospitality, consumer services, energy, technology, healthcare, REITS, financials and others. Advan derives its datasets using multi parameter models that analyze cellphone location data crossed with curated geofenced areas.

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