On February 22, 2024, Floor & Decor Holdings Inc (FND, Financial) released its 8-K filing, revealing its financial results for the fourth quarter and full year of fiscal 2023. The company, a leading specialty retailer in the hard surface flooring market, operates 221 warehouse-format stores and five design studios across 36 states. FND's diverse product offerings cater to professional installers, commercial businesses, DIY customers, and those seeking professional installation services.
FND's performance in the fourth quarter of fiscal 2023 was marked by flat net sales year-over-year, with a notable decrease in comparable store sales by 9.4%. Despite these challenges, the company managed to open 14 new warehouse stores during the quarter, reflecting its commitment to strategic growth even amidst an industry downturn characterized by record lows in existing home sales and contracting flooring industry sales.
CEO Tom Taylor commented on the resilience and strategic initiatives of the company, stating:
"We are pleased to deliver better-than-expected fiscal 2023 fourth-quarter diluted earnings per share of $0.34, primarily due to comparable store sales that were better than anticipated. We are proud of how our teams are collaborating to successfully execute our sales-driving initiatives, prudently manage expenses without sacrificing customer service, and strategically grow our gross margin rate."
Despite the decrease in net income and diluted EPS, FND's ability to maintain its expansion plans and improve gross margin rates highlights the company's robust balance sheet and cash flow position. This financial stability enables FND to invest in new store growth during challenging market conditions.
Financial Highlights and Challenges
The company's operating income for the fourth quarter decreased significantly by 51.3% to $46.2 million, with operating margin also declining by 460 basis points. Net income followed suit, decreasing by 46.4% to $37.1 million. Adjusted EBITDA saw a 24.7% decrease to $107.8 million. These declines reflect the broader challenges faced by the retail sector, particularly in cyclical industries like flooring, where consumer spending and housing market trends heavily influence performance.
For the fiscal year ended December 28, 2023, FND reported a modest increase in net sales of 3.5% to $4,413.9 million. However, comparable store sales decreased by 7.1%, and the company closed one warehouse store. The full-year operating income and net income also saw declines of 19.0% and 17.5%, respectively.
Looking Ahead: Fiscal 2024 Guidance
Floor & Decor provided guidance for fiscal 2024, projecting net sales in the range of approximately $4,600 million to $4,770 million, with a comparable store sales range of approximately (5.5)% to (2.0)%. The company anticipates diluted EPS to be between $1.75 and $2.05 and Adjusted EBITDA to be approximately $520 million to $560 million. These projections are set against a backdrop of continued investment in new store openings, with an expectation to open 30 to 35 new warehouse stores in the coming fiscal year.
The company's strategic focus remains on expanding its market share by leveraging its everyday low prices, trend-right product assortments, and exceptional customer service. With a strong balance sheet and a clear growth trajectory, Floor & Decor is positioned to navigate the current industry downturn while laying the groundwork for future success.
Investors and interested parties can access further details and discussions of the fourth quarter and fiscal year 2023 financial results through a conference call and live audio webcast hosted by the company.
For a detailed understanding of FND's financials, including reconciliations of non-GAAP financial measures, readers are encouraged to review the full 8-K filing.
Explore the complete 8-K earnings release (here) from Floor & Decor Holdings Inc for further details.
