FND - Earnings call transcript Q2 2022 | Floor & Decor Holdings, Inc.

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Operator

Good day, ladies and gentlemen, and welcome to the Floor & Decor Holdings, Inc. Conference Call. All lines have been placed on a listen-only mode and the floor will be opened for question and comments following the presentation. [Operator Instructions] At this time, it's my pleasure to turn the floor over to your host, Wayne Hood, Vice President of Investor Relations. Sir, the floor is yours.

Wayne Hood

good and operator, you, afternoon, everyone. Thank

Sayman, on are Tom me Vice and and our of Trevor second today call President Ersan Officer; Financial conference earnings Chief Vice Taylor, Executive President Merchandising. quarter Lang, Joining Executive Chief Officer; Executive

expressed including & get webcast like to and started, Decor statement. its the past within company's meaning a of contain any company's forward-looking of performance or or future or remind this during Private Floor results would financial is including risks a those Comments and SEC that statement future market information other expectations, statements. events, to Reform statements filings. subject not of XXXX language. obligation characterizations no that actual The statements such conditions are also harbor for guarantee made I any such forward-looking Act listed Securities in conference projections Please forward-looking is from we in results. of reason, could update future everyone the Any to Before safe call forward-looking of those to Litigation assumes future and the differ uncertainties. market refers materially projections note

of will this Relations A performance available During operating defined can our of Investor call, on this financial website. understand Relations a press enable of which on release, financial replay disclosures most the basis Investor G. non-GAAP each related discuss with We our non-GAAP the these the core measures on earnings will comparable directly by ir.flooranddecor.com. periods. at non-GAAP is GAAP conference be materials together found the measure be call, company in as comparable website available believe Regulation recorded measures better reconciliation A SEC investors our to between to

me to turn now call the Tom. Let over

Tom Taylor

us Wayne, quarter call. fiscal on for XXXX you, our Thank second everyone joining and conference earnings

earnings. Trevor second thinking the call, financial our about will and of performance will remainder our the detail then in are quarter some discuss XXXX. highlights of we I more review of today's During XXXX how discuss

wanted President we Before today get Vice promoted role from a of President that Floor Chief Executive be Decor. Officer comment of take Financial to on to exciting and started, the moment announcement Trevor I & our will to

Following make announced summer, extensive this for retirement internal deep knowledge external concluded critical products an Trevor's important last for him and role. person Lisa's right this our conducted we the for strategies, industry role. company, that knowledge passion and and culture, search We

XX Trevor In businesses. vital RAM addition and to last years, being our Pro a for information has our thought growth the leader been and the an commercial over responsible and strategies outstanding CFO strong of technology

conduct partner plan The are long-term We Trevor's candidates search and will towards new as continuing effective external XXX Trevor enthusiastic a with about $XX we company promotion and sales Chief internal will stores. appointment of a a of CFO. for our and new in Officer, billion upon the to execute Financial be

to results. our quarter second Turning earnings

earnings higher adjusted and second months and better sales XX existing of includes rates, results declining record rising earnings inflation, our per we cost consider year's mortgage share are per We $X.XX to than sales home the environment, extraordinary congestion. current operating high profits, and year-over-year supply which global chain These expected pleased gratifying deliver when of quarter share. XXXX are us particularly to fiscal diluted previous

strong, hard dedication to work we confidence macroeconomic execute a macroeconomic to even grow We price in environment. how growth our our and in We manage and proud for giving our added near-term the their difficult vendor competitive access believe ability moat our share our is challenges. our associates and to of successfully people, to I product, continue from want market our inventory they us teams as and partners consistently strategies are navigate and profitability. thank

warehouse During fiscal new period last seven stores including we the warehouse during stores in one markets. six with nine opened We May in and April, compared year, the same second in quarter six in June. stores stores two of XXXX, format opened

build Chicago and Atlanta, existing We our markets with out openings to continue in Houston.

quarter in warehouse our quarter noted We in As XXXX. markets open third in first later will Atlanta warehouse in Minneapolis. Lake be of call, earnings these we the including eight of fiscal the quarter in in store open XXXX, quarter. existing with closed and store XX of third to quarter stores our we in first ended the will store warehouse South our second in Most fiscal Therefore, warehouse-format openings the stores quarter states. XXX third plan

successfully quarter opened in opened format our weeks. at intend operation were to locations, will studios stores will this of and pleased openings stores design open in are more have XX bring owned six of the which XX year-to-date XXXX. XXXX, operating Atlanta planned be in We Studio, in warehouse fiscal opening of the fiscal warehouse leading XX% of We the half is expected eight to which year, new of fourth Design first the end that our

sales XX.X% XX.X% geometric quarter XX.X% quarter fiscal second versus record the a rate with period $X.X comparable annual of basis, XXXX. first growth same XX.X% fiscal X.X% the growth. and nearly increased our three quarter growth in sales second XXXX year a billion the to compound store XX.X% quarter comparable in On store compared to Turning increased and Total of comparable in in sales sales fourth sales last increased our store year.

weekends traveling and slowing were comparable returning quarter expectations over to below about due sales summer second from homeowners Our demand. store holidays macroeconomic slightly headwinds federal primarily XX% our results and of to transaction

increased homeowners our in April, X.X% strong. sales X.X% in May our in remain and Monthly, and X.X% comparable Pros weekday store June. Our from sales

fiscal sales where are We third are the up pleased store to the with start quarter of XX% comparable our quarter-to-date. XXXX,

quarter in our by growth ticket. second sales average expected, were As store driven comparable XX.X%

in an of our increase Our in sales the pressures, factors: increase cost the retail e-commerce following average and vinyl ticket and penetration benefited Pro, laminate mitigate increase prices penetration sales in from designer-led higher-ticket initiatives. of and an an to

Additionally, customer and better see preferences ongoing continue we towards best to point. our price

declined from year. last transactions quarter X.X% second comparable store Our customer

comparing a with we transaction second XXXX. growth quarter in the of of As XX.X% fiscal are store reminder, comparable

Moving to our Pro business.

successfully strategy Pro a wallet holistic among to are our grow executing share Pros. We

the XXX our validating working. Pro previous last Pro quarter to growth XX% Our comparable total from company's above basis by market transactions sales Pros were significantly approximately growth Pros comparable year, Notably, quarter the from points that are period growth and our our X% sales store second over of for the grow strategies second increased among rate. up in same Consequently, the of XXXX, share accounted year.

of that our driving our have key Premier awareness Pros more this XX% of with top on us year-to-date. Pro are the rests spent XX% and the A growth pleased building We strategy Rewards to value redeemed PPR. PPR sales the demonstrated in points value members, or and and come The XX% second XX% program the year-over-year from our enrollment Pro Today, in from program's quarter. points is redeemed. of increased over

towards to access the in Pros global our living example with are redeem opportunity One pleased ensure points have to our [unprivileged] to good. social also is recent that nonprofit equitable glasses. We offer communities a to working people (ph) to partnership RestoringVision,

from e-commerce business. Turning our to growth our

executing focusing continues optimize digital As e-commerce conversion. our during product, team including believe inspirational discussed customers' on calls, that and will strategies experience, our prior we content further

XX% last sales and compared second accounted year for the XX.X% Our in quarter of XX% increased with year's from e-commerce period. previous sales

exciting discuss are with now progress we me the design Let making services.

have In doubling career quarter, We As rolled out Miami. To in and offering second a quarter, these been in Dallas over building we prior in in design. our are plan will that and we and which Atlanta. we for service we launches D.C. in-home continuing designers investments and in-home focused roles and to have design best-in-class in-home have our now design exciting touch, technology with XXX we down In Houston, calls, third designer end, launch consistent, discussed stores design the clear grow in Pros. people experience and on Washington, seamless homeowners our paths we high our market, services in on offering follows on our the and teams. service

significantly working. the the XXXX, points last strategies comparable total increased Design transaction sales sales well that penetration growth XXX balanced sales from was regions second almost designer of penetration design our store were rate. pleased quarter between comparable strongest the The growth We and year, are growth ever. above posting all are design with and store sales In fiscal company's basis ticket. average

awareness We with rates, for higher these continue We're basket we to higher services. ticket, and find project, excited benefiting margin. with a design categories that and our of stages score, when higher attachment average a a a designer rates satisfaction about initiatives the our the becomes are involved in early from selling penetration familiarity and customer gross higher building adjacent higher see

RAMs to and in comments regional Spartan our our worked that my stores. with our managers account turn Let me includes which or commercial, surfaces growth

community Spartan commercial large end reminder, Surfaces on a As focuses for the flooring and installers. A&D primarily contractors

Our is RAMs operators, and on smaller more focus smaller commercial downstream installers. contractors flooring owners

of have beyond. in strategies growth XXXX completed and functional accelerate with to areas integration implementing Surfaces the We Spartan are and critical

We logistics access centers. are leveraging Floor and distribution products, Decor's & to

Additionally, to contract quarter, find Ohio-based In commercial the can of right nationally how flooring acquired we distributors. nationally the we continuing through second sales and acquiring expand Spartan, group. opportunity we are Source we They are partners. expand by example another experienced when smaller

following earnings its quarter growth strong very a financial and first again are second expectations and We excited results about prospects Spartan's our once performance. exceeded Their quarter. sales

pleased are year-over-year We managers regional RAMs, from quarter sales our increased first or second and XX% our XX% that also quarter. from account the

account of Overall, onboarding the the excited four commercial continued the opportunity out with regional We of about quarter our in commercial in RAMs managers XXXX, XX fiscal and strategy. our adding intent we building remain RAMs by market second XXXX.

we overall supply the past you in capacity supply are this constraints pain chain. global from the believe At me about Let the juncture, update we the chain. peak global

spend We improving reduce needs, at our ocean merchandise in-stock trucking manage have the time, and same capacity ocean and while been effectively our able our levels. to TEU overall

do we markdown not a that to risk reported. subject have retailers have other reminder, As the some inventory seasonal

union ports Long labor Ports come to expired The did labor monitor contract July before the on West to and not between West and agreement X. the continue Coast negotiations Sherman We a Union. Warehouse contract international Coast labor at

However, both sides we disruption. continue experienced and have negotiate, any not to

in these the XXXX. our pleased our current trends from on with are ocean would we to how supply is closing, on We method in year-over-year of and we as quarter are average cost our the by fiscal the financial chain, but like likely the of global results. recent accounting. throughout results planning trends encouraged XXXX second impact freight In will benefit I inventory rates Most reiterate weighted higher are our year-to-date

on XXth store growth. our We to to track consecutive report are sales be excited comparable of year

weakening a and for the to we market. to turn that the inflationary results and and have to over demonstrating model quarter teams, I'll of the challenges, now the are global XXXX more right call second We chain navigate outlook fiscal remainder our our Trevor year. in strategies housing the agile supply discuss pressures financial business detail

Trevor Lang

Thanks, Tom blessed take has recognize from only new is to the Tom. announced I leaders retail, with want and Officer, group being opportunities to and best role, possible some new like leaders and our President. day. his and lie every role. of of to Accounting fantastic work promoted a this my promotion get also I'm Decor's of Luc this believe to also board in years Olson growth to I The to today. on deserving on I three incredibly with have because the entire this best excited executive of would well is us, In future. we fantastic Floor and our the job clarity I to in thank Chief done with days & work the team Luke

will how results. will and quarter our the XXXX the statement. among to we thinking fiscal I in our flow the line significant statement, discuss some Turning cash balance about are I discuss fiscal remainder changes of income items of second XXXX. sheet then

$XXX.X year-over-year a quarter Our due XX%. XX.X% profit less-than-expected from XXX margin freight to million decreased fiscal to XXXX basis higher drove merchandise supply second points gross chain decline margins last costs. and increased rate gross to the Lower The a year.

an All continue chain outstanding our job our managing inflationary and to in of do complex global environment. profit this teams supply gross

gross with expenses XX.X% XXXX, additional our expectations. XX since stores card $XXX.X our of We to The align pleased versus growth, grow the line primarily fourth advertising higher from operating fees attributable to Selling rate net opened quarter to our to store million sequentially last warehouse are continue transaction executing to strategy year, depreciation, X, required in new credit processing increased stated XXXX. and our sales margin expense. was July increase staffing and with

and last selling our sales, of driven store entirely from percentage operating XX.X% stores. new a expenses the year points period As basis XX.X% by increased in to same XX

we selling to growth. quarter and in at last As expenses store leveraged year, second the operating strong due basis of a sales reminder, points XXX our

selling We on expenses are was the pleased a operating that basis. store our flat comparable and second with quarter same rate store period

Second and increased year. primarily approximately points leveraged point, X.X of from lower as employee a of consulting X.X% integration and acquisition for to quarter leverage expenses period to incentive absence accruals sales, lower and percentage was general year The current expense and administrative XXX year-over-year last X.X% expenses. compensation, percentage the basis expenses due

expenses. to incurred to in last the $X.X rates from million to related occupancy million year. new year $X.X million expenses As decreased a favorable X.X% Spartan acquisition-related other reminder, expenses Surfaces and last $X operating due we store Pre-opening

due The last $XXX,XXX in an outstanding in increase debt interest primarily or partially interest from expense offset rates interest was same and borrowings, period an capitalized year. the net by increase expense on interest. in increase quarter ABL our to Second XX.X% increased

Moving profitability. on to our

XX.X% Second in last our $XXX.X second primarily to to margin points from XXX quarter gross grew year's EBITDA margin last decline basis, to year's basis from declined rate. EBITDA rate $XXX XX.X%, On record quarter adjusted our the a million due X.X% million. record

earnings GAAP and quarter per share, per declined Second and diluted net $X.XX to respectively. X.X% $XX.X million income share

increased year. $XX.X million $XX.X Our adjusted million income second last to X.X% net quarter from

diluted non-GAAP expectations. increased We $X.XX average that outstanding. last reconciliation quarter be today's per exceeding second to earnings in are from GAAP adjusted second to A can We our found diluted record ended with share shares pleased earnings of XXX,XXX,XXX $X.XX weighted last release. our year, quarter the complete share our per earnings year's X.X%

Moving on to our balance sheet.

the in-stock The new our inventory, was investments fiscal inventory. reflects SKUs of from and increase intentional of at we growth, an fiscal making same new higher to inventory growth last been period quarter XX.X% of billion, inflation, end XXXX. $X.X and XX% additional XXXX the our end from in-transit Our the second year have inventory of store the improve innovative

As we expect of due fiscal to XXXX above inflation flow second and moderately inflation. growth, XXXX annual our think be sales receipt half about the to orders, purchase the in year-end inventory our primarily we

inventory have to seasonal As retailers not markdowns mentioned, we subject do Tom have merchandise reported. that other

the inventory. last million The For ended weeks the the activities flow XX, $X.X same in of by was in provided was growth in cash XX to decrease our cash our net June operating XXXX, compared period $XXX.X million year. operating result primarily

the ABL quarter, in million we end million under $XXX outflows increased increased ABL. XXXX caused from the quarter of investing continue million flexibility including last investments size borrowing February X.X% to to the investing our Subsequent the million end at of We in to facility unrestricted investments term macroeconomic growth the to borrowings $XXX.X our available store $XXX.X increase the available $XXX in our we million from as Our had leverage our due maximize the asset to plans to the well us, of $XXX.X maximum XXXX. $XX.X our us to These prudently cash want million liquidity and end and immediately uncertainty. extended base. to and equivalents the facility quarter, to due net XXXX stores. year second from and financial cash under from growth million maintain more to support to At our our $XXX.X second existing loan growth of $X.X to our of million ABL in second the borrowing July as

at third quarter peak to ABL going borrowings of expect year. down end the in the before We the

could earnings fiscal to the conference me end challenging. that top that second of our first the half provided quarter we beginning thinking call, more $X.XX earnings achieving In to the of said we're about XXXX of at my XXXX. guidance comments Let turn our XXXX how we $X be of

XX have We recent months and declined about policy a have rates sales are economic ago. monetary seen year inflation and for Existing row housing steeper in affect the tightening months home consumers with market. they what a were declines mortgage accelerating in double in slow growth

high monetary half on results of and backdrop the XXXX. expect more in challenging inflation aggressive macroeconomic second We tightening of for policy continued

planning for year-over-year in XXXX. are in transactions of declines the continued We half second

in compared reaffirms view. this Our second the X.X% transactions decline decline first X.X% with quarter quarter's

prudent to pleased to start store to forecast mind, past planning over for where growth comparisons. comparable and to period. are to X.X% easier quarter-to-date We sales comps With slightly due our lower That would updated in environment. a the from the midpoint and with the third macroeconomic to our earnings we our the cycling quarter of store comparable sales decelerate quarter range, share, than the reduction of the comp last year's We comparable in the approach slightly third share up XX% -- begin on $X.XX. this XXXX, of to XXXX durability as XX% guidance high during it's about are store we the half At business as declines from the said, year. we of transaction relative quarter's of of that are original from could diluted the guidance range believe sales prior single-digit a transaction agility date the XX% prepare fiscal better now the and adjusted in our be we diluted XXXX economic are $X.XX declining second second demonstrating per about our adjusted of earnings end challenging a growth expect of represent X% per

half the XXXX. other me building blocks provide some Let in consider of to second

result in to making the of the sequential mitigate improvement our is gross margin pressures global half still price chain supply are sequential gross and restore rate. primarily our rate margin increases achieve cost second the in XXXX. of to the are to we working in primarily We improvement The

X.X% our quarter as improvement our the margin XXX strongest rate double-digit EBIT growth to most in the growth half margin gross We is of second XXXX. adjusted we of rate year's gross EBIT growth to XXXX. be high in to fiscal achieve single-digit sequential fourth cycle drive of points in quarter quarter decline basis third last accelerating for reported XXXX The following EBIT the of expected low dollar growth to We rate. the past the expect the hope we second year in in the in

our outlook. to year provide guidance me of full XXXX some now Let pertaining revised the fiscal

grow million. rates. adjusted with guidance and million. We benefits, expect billion of tax excluding diluted of our resulting $XXX outstanding and borrowings due $XXX guidance. our earnings guidance $XXX $X.X guidance per on billion. share compared exercises to amortization our We We expenditure stores, to prior to prior acquiring to of with of from XXX,XXX,XXX the average unchanged from capital model these restricted XX sales Q&A. and $X in unchanged times come we are believe With for expense to restricted from $X.XX million challenging our of stock all compared from $X.XX small the to million to open unique XX% only million XX%, design weighted interest $XXX guidance prior expectations of we capital are with more to option I'll Adjusted guidance with XX%, our billion and stock this spending our I'd not like you million XXX,XXX,XXX billion as sales to guidance. share. every $XXX our $XXX right prior studios stores of hard their to strategies to million with $XXX up $X.XXX interest prior estate shares. intend our stock are format the to and compared and store new our of to million approximately units, prior to but our rate our of real prior execute year. our million Diluted due guidance our higher now compared guidance be Depreciation and our Net We Tax of everyone, spending approximately $X.XXX of compared much noncritical shares partners the serving lowered four for and million opportunities approximately of be projects. primarily million but vesting expense plan continue market to over prior dedication work of for warehouse of our XX.X% $X.XX Comparable to business to $X. XX% associates talent and likely to of still guidance prior our to Operator, approximately agile compared own prior $XXX closing, growth not of range $X.XX $X.XX $XXX to compared and not in turn day. to in customers $XXX thank In of growth million with EBITDA that, to to range have with it a to

Operator

[Operator Thank floor question is Go first Saham Zach for ahead Wells you. The open comes Fargo. Zach. from from And Instructions] our questions.

John Parke

what John how for the Zach. Hi. and box there took independents? Good afternoon, the you guess, both pricing on I is from you're guys. in the share the Parke out and guys environment? I This just guess quarter on big much seeing latest you can price

Tom Taylor

I'll versus We take the the cost on is pretty big the This marketplace feel don't taken, we how we've give We feel our much competing good. and confident pricing like the boxes Tom. in We is how moat we're price. price very but have independents. out taken that. still around Yes,

Next.

Operator

Sorry about that.

comes Steven Our from ahead, Zaccone next from Steven. Citi. question Go

Steven Zaccone

looks like than just weaker, better transaction from your And the guidance half. taking bit in congrats in you versus more think ticket how Algo standpoint. you It promotion. half second detail. Great. second a a about about about above higher comps back saw referenced, Trevor, in I clearly like quarter the slightly macro then talk Thanks what sounds level, question. on you talk but expectations the for my to still getting wanted Could transactions? the you

still and difference how sales guidance, weakening between do pretty good the bridge same-store it the macro So we maybe looks overall.

Trevor Lang

want I to make. you One very much. correction Thank

we're just the tax it's a the and might then XX% want said to that I I have XX% I expecting clear rate. think release, in in a and prepared tax up rate, comments,

prepared I the So apologize, in think I didn't get that. comments,

that front of as reflection a XX%. the So And what as first of obviously, also stores we in months are last little to QX And numbers a the they on gross just is we July. us, we up off, better Business in year. hardest think easier basis, almost a relative comp in we're -- six happened what gross compares about just QX comping numbers our mentioned, next is were sales were are in our is believe QX, were on against. Tom basis,

they So but are listen, months. but that's down think And last as Tom existing a are, few will and have part back of attention economists, we the the and close obviously read we we savings were reason We of at QX. now, little home then, their slowed, to lot. spending in are X%. is that we're pay out not Mortgage high mentioned, a eventually people especially stop up Inflation as know well. rates bit sales

little slow bit. plan are have slower, the business that upside. is go be just towards to things we and line, that fourth if hope into we'll structure a but quarter, cost structure and it are not we're a then our appropriately things better, get trying that. made our to we're cost conservatively sense just some may we economists, feel like And if expect the we're things bit We So that as such prudent to weighted in wrong,

Operator

Morgan Gutman Simeon Go from from ahead. next our question Stanley. And comes

Jackie Sussman

question. Jackie for taking you is so Simeon. much our This Thank on Hi.

can any if give of you turnover us some sense precisely, know the changing. color but business what we any Just percent versus as know kind -- existing is there things Is more don't macro. units you of of from coming non there's way home sales to the on

Tom Taylor

can don't has to our Historically slowed, know have here sales when We I'll but XX the a very you years existing outperformed over said, way. have meaningful last as been exactly, And in sales mean home hard home been I it's the business challenged. the you Trevor, when market more from. we've come start, where sales good existing answer. then say

what's happen, way it's prudent So not the be but know about just as think exactly Trevor We to kind things. economists. -- said, hard to of exactly in trying anticipate to don't we're we're going we

I to about in we're sure like off -- half. said, back So quarter, the this good not we're a but start

to want just thoughtful. you're we sure So make

Trevor Lang

of only so going cycle XX% the in the right, would the is homes increased thing value. rate. And Yes. different I this every different. U.S. to cycle what's is a probably on They're Tom are over. They're add, exactly good turn mortgage about in not is And is sitting

And whereas in aren't over that income, when going people value be who going down. or turn have so you existing those their at homes, they home in are discretionary cases homes going equity have negative to their home also to you negative most least have values sales,

in different environment. And little bit so that's a this

can service we got an incredible So the and think have them. that stay people -- and to are going in homes assortment their the invest ability to we've

Operator

our Chuck Haskett. Go Chuck. from question from Grom ahead, comes And next you. Thank Gordon

Chuck Grom

on a promotion, Thanks Trevor well And congrats, the deserved. lot.

on those remain Just with really like backlogs good. it and on the speaking sounds throughout people Pro the front quarter,

on stack, of points hearing as a And the an Just from basis follow-up monthly the in then kind on of the curious what you three-year geo hundred it's July are follow-up, a just -- as a improvement Pro guys improvement. few customer.

has curious Did could Just you July? think take accelerated. has flush month little Thanks. us. it in why you if pricing of the business bit Just more out that transactions? been you up for Or the a

Tom Taylor

Trevor, part, part. Pro can take the take the I'll second you

same So Tom. say part, we're this Pro things. the the hearing on I'd is

week. week they're in talking during tours in the to the at during The weekend, teams, shopping. It's look Pros our busy. are and and look our stores And you during when versus are the nature, Pros store Our the still better at it's we busy. anecdotal it our Pros too, are business,

design we As and in is just seeing, all increasing. we're penetration and of Pro ticket our is part too, average that average our business business business growth mentioned e-commerce of --

them. So of front good in Pros in of business that's all -- the our about well, turn so and of that have which amount backlog that's doing we feel the

Trevor Lang

doing actually just -- have little is front, little transactions Yes. just than of Again, had a And July. partly last for better this reflection comps bit the but of we sales year, last that's strong, the year. not we on year, a X% accelerated a negative year the have July and in the comparison posted bit easier this

Operator

next from Go from Melich And question comes Evercore. Greg. our ahead, Greg

Greg Melich

just on that, the be but a to margin I of margin we’re was the the there. inflation approach majority? still It And number Thanks. driver would part was it gross on linked on ASP quickly inflation gross and up path one are of sounds ticket, then biggest coming follow XX%. like to then the Hi. that? we with And

gross I you that last below Or Is quarter, you Trevor, number XX% that the think do cards? it's the still in margin. was gave think that?

Trevor Lang

the strategies we have are think specific ticket, I helping our on ticket. that some also

As also that. quarter, rigid we be vinyl better reiterate continues again, our total strong core our best within and best improving. called to I'll -- to people We're business just out last is better and seeing upgrade

that's ticket driving So up.

Our than incredibly tickets e-commerce be the business in-store continues to strong. lot a ticket. E-commerce higher

the tenure business strong. Pro higher We raising we've my we've the ticket. is is we're company. strategies strongest who's pleased also That's higher that least yes, our in probably It's the are relative lot a business had ticket. And much got business as That's at ever well. had more we've in probably retails But Pro -- here. probably a penetration and Our in are with taking been as much design really to ever off. a recently, design

of fall given was then specificity second amount being what and a of And part of increase, that fair top, -- mentioned a but what Greg? that well. there's I ticket it into the the ticket haven't We that amount fair there's things as was core centric those was XX%

Greg Melich

margins? gross it to gross you the I know talked about What past, margins in -- means

Trevor Lang

in. obviously intentionally that put we didn't Yes,

I the think get approaching probably of closer then we to guidance, XX. end the our if a be at the end high low of if we goal. tick which the we XX, approaching just we're below hit But guidance, might will is obviously

Greg Melich

luck. and Got good it. Thanks

Trevor Lang

Greg. Thanks,

Operator

Forbes Guggenheim you. And Steve. next our Thank Securities. Steve from question ahead, is from Go

Steve Forbes

XX% appreciate of a Good sales. of in the outlook color to just expect afternoon, sales frame year Maybe But congrats, of as XXs year we follow-up the to throughout. the sales on could by help guide the mid- regarding implied quarter, is if Trevor Pro curious move right high full level Chuck's sort well. And you us outlook. as full as I for Trevor. Pro the for the sales percent the question Tom,

Trevor Lang

Yes, I so. think

Tom Taylor

I that change, that don't the mean, says like more how from as apart much nothing going perspective year penetration continues. is the know don't it specific. that, that We see has I I that really that, but anticipate our and break gone gotten to business of Pro there's I better the

Steve Forbes

Thank you.

Operator

our And Keith you. question ahead, Sandler. Peter. Go next from Peter Piper Thank from comes

Peter Keith

everyone. afternoon well. Hi. Thanks. congratulation And my Good to as Trevor

hold just So that a Pro sounds to continue Does as business like DIY? Or more little ever. side. detail wondering strong I could as traffic you if provide it any strong? the you pretty was seen it's on slowdown DIY have on

Trevor Lang

his mentioned prepared in this Tom comments.

We from kind stronger. retailers saw after business other two weekend to certainly see be decided as the think the of But business holiday some of as that, we heard business. games. well. that years, mentioned, people I go ball then on on the vacations, I've Tom take to

I do to how taking haven't think enjoy services out. many vacation they other done, see summer. a And and so holidays, this plays that people I that back and able think long being enjoyed as And they it consumer not we'll as maybe school that get after to not nice

Tom Taylor

people Yes. I the only good like vacation be add and I'd business week has August to feels as is are in and pretty now, mean started the thing of us. August first ongoing when it for continues

add. I’ll So just

Operator

our JPMorgan. Go And question ahead. Horvers comes from from Thank you. Christopher next

Christian Carlino

be speak years. how you any It's And Carlino quarter? traffic Hi. whether Chris. through you half, the look cadence Any an at back the excluding in would originally impact Could expected evolve as traffic? it's And expect the the on taking congrats anticipated for Christian then price helpful. to to you you of half than to way given look you’d you evening. it more to on not the of are Big staff three just back Trevor. color at Good comparisons,

Trevor Lang

the But you every throughout that we out, quarter. We -- X.X% intel traffic. saw intel We on a March. Yes. good of that. quarter deceleration good in transactions fiscal month QX. quite because -- March called single have I'll I in the transactions for were down we We month as the down have were we moderate of exited we give of just on X.X% don't said

just not slowly retails the while and kind costs, chain go a higher year, lower go is, to continue so were, from And demerge they rest domestic bit down we things of still pricing as yes, throughout some with costs, Supply as saw we will that. answer cost, of transportation And up. expecting what are believe the see we you as a on perspective transaction is U.S. far throughout congestion the as container international the volatile little once and what they're detention maybe

And the continue. ocean everybody over that's the expecting bringing reading United core. the costs to we're we're That's stuff And across is not for who's in those in everything so into that the States. press just

go So we build and our gross said, the to the sequentially hope will hit we of we do gross guidance, that end them we margins to back as approach to up. expect And retails our high continue margin. is and goal XX% grow if

Tom Taylor

this they're a the is they're than pricing traded -- price price lot us, manufacturers their has increasing posted thing the than we are competition how passing are you spread, too, are on rate seeing. the are from other that them on there than read, faster only course it of a faster to we perspective that the and publicly the about up can at add between our faster thing they -- increases And good I'd throughout a I'd held of year. spread the say, And feel that

independence even is So the way. say and pricing continue really pretty versus best puts in the competition it hard our that about more good to surface to feel with selling the to in long against our significant us we a And that. that would more in elevate stores that gives I better a independent us as also stores, what's product, ability consumers compete the and --

Christian Carlino

Really helpful. Thanks.

Operator

that. And of Suzuki ahead, from you. question Go comes Liz. from next Thank Sorry about Bank Liz the America.

Liz Suzuki

Thank Great. you.

mentioned your orders you a in suppliers of your of you from you the demand But sitting this problem markdown from softer are don't point? anticipation slowing So at seasonal have had inventory. on that environment, risk

Tom Taylor

taken a sales paying what cautious I of look would we you view look absolutely we mean slightly think half of comments that to back felt end like we're Yes. as inventory adjustments be the our to the the and attention we made year. the and the if by growth over that, in delivered we've is. year, That's I prepared why

discontinued of as So feel be. what it's good same go of to about cases, the stuff good new what's -- lot walk you in a items challenge you It's brought tell. I today as those position in stores we in. would looks inventory. our try can't will pick inventory the or one our we And can as It and our good

-- sell. So we're to there's a make having a go it no down away. good product, worried it about market not It's will

Liz Suzuki

Right, anticipation versus that continue that And the stronger into the about of bringing planning assume likely second stores? mix mix for would demand you're right. the to thinking then DIY product to Pro I that impact just you're the is half,

Tom Taylor

they're mean, store -- buying across all Sure. end who across for Yes. the buy Pros if I and departments. buys user the that I mean

certainly attention bringing we're and we to we inventory in, -- what feel pay about but position. that comfortable our So good feel with

as year. as expect increase in-stock, with Our inventory it's been you'd all good as that type of

Liz Suzuki

you. Thank Great.

Operator

Jonathan And Matuszewski. our next Go from question sir. comes ahead,

Jonathan Matuszewski

you repeal P&L. my potential Great. Specifically the expect do in medium-term walk flowing you XXX interested of when lower near question. through see impact Thanks And Thanks for much. announced? onto the if in pricing think us to a potentially Could to would when through roll you tariffs? back were help something COGS taking and so

Trevor Lang

we just majority for of are. a capability that manufacturing domestic the the tariffs not thing would be mean because I vast those good think obviously Yes. what there's

that And It so just in margin in zone, anywhere. side. it's the call what through of really the roll a that not pay that they from win scenario, bit our Floor just Decor, inventory time consumer take but that's because our because been sitting & a on to would it's we likely is will would to that received have and state tariffs distribution free centers trade

inventory tariff. But that center all come take likely eventually, have in So retail and we costs would pay some. down we're heart, watch our the those And come down. we'll distribution down, XX% our those as as likely at costs would merchants to

have everybody with now this market Last a we've in our well. rational, dealing are -- including rational be pretty We seem and also see what for to fairly been was on us. inflation are going to our watch all what's competitors the year, happened, going this as doing. been competitors time of When

as take that gross were number you will on little the definitely you a margin eventually, marketplace And -- come a little if as come the bit probably down, bit would place. a to better get you that the as probably So but still to down, a would rate be the would better months that fast you expect see costs be would occurs. take of retails bit when a costs come But happen, because of upfront retails it I benefit don't would actually generally come down down.

American think thing we it's right hope We the for consumer. So it the happens.

Operator

Thank Bottiglieri BNP sir. Paribas. you. And Go Chris the next from question ahead, comes from

Unidentified Participant

Thanks Trevor. for questions. [indiscernible] congrats, for Chris. Stephen And Great. Hi. our on taking

And curious just your new channel, the was the could your to exposure or I through more speak that So the to to if what's stores through largely exposure so business. that is channel? RAM you homebuilding end

Tom Taylor

very, by more insignificant. stores, If this usually of don't future, it's opportunity do custom homebuilder We -- We It's sell sell of and like home things big Tom. a today, they're really new homebuilding, It's it's one the and really in very don't less little out an we is do our we very, building. builders. impacted who but buys new this. to the of we think

it's insignificant. So

Unidentified Participant

lot. Appreciate Great. Thanks guys. it, a Okay.

Operator

sir. comes question next Justin Baird. ahead, from from our Go And Kleber

Justin Kleber

removed, and more to costs mean returns Trevor. to response tariffs low to of the guys Justin I Kleber Baird. if and levels to Tom when It’s and there decline are how you or from to historic in Wanted your If you a a question. unit if retail? single-digit understand just range. ultimately lower growth average afternoon. ticket continue follow-up Good to retails. lower Jonathan's Yeah. favorable ask response top trying looks line expect would that just I'm

Tom Taylor

and what pass would it right? savings, I sales on passed our our we competition say along up. So to tariff decided tariff unit the think on with depends not go that happens if I'd savings competition, that and

So have in we'll the environment, to see. wait and natural

Justin Kleber

Okay.

you Just guys have elasticity? negative though, you any do seen as feel you've to confirm raising been like retailers,

Trevor Lang

a been perspective that I our I the mean -- in transactions in history macro just negative have I from say first the that's this more that would and time is company, think

Tom Taylor

partially macro, comparable. Partially

Trevor Lang

Yes, that's right.

Justin Kleber

you, Thank guys. Okay.

Operator

Go our David question from Partners. David. ahead, from next comes And MKM Bellinger

David Bellinger

congrats Trevor as Thanks well. to and Hi.

a coming question, some comments this tracked below little comps given my your internal that QX at expectations. of So

XXXX back about So look at number you of some and the samples for back those quarters? the indicators in are the traffic of fact, what guys. And well. leading forward could of housing when step consumers slower or a impact on like the more half not several if, you an the market have Thanks, just business of in year, are of outlook, requesting, telling the but as the next web

Trevor Lang

the sample I'd is business clear leading That's good it's had mixed. you. I say a good. for I a wish answer I indicator. mean

Our good. are looking sample sales

incredibly website their has business, strong, our it's that measurements, while against have slowed. seen can some across measurements us, of told -- other have it track decelerated. of traffic just we Pro web Everybody’s in their not we business, traffic us Pro decelerated people. But they've Our has some the

deceleration kind as a it's positive, So web of Pros ultimately measurements, sell. mixed traffic seen but samples which well the as were leads a to have bag, in doing you the

I'd say Pros been improved. Their have thing resilient. very rates close though, The other our they've about

better So they doing job people, but of they're less be a may seeing closing.

Tom Taylor

made to easy. Pros, installation process. talking [Multiple all our be the specifics, that's of you're It's Speakers] When not

Trevor Lang

have we people visibility That's to.

Operator

from you. Feldman from our Joe next Joe. comes Tesley ahead, Thank Go And question Advisory.

Joseph Feldman

you little much too Good didn't afternoon. I Hey, to merchandise color guys comment bit. a hear what maybe of guys. the selling. about on was Wanted ask

bringing or laminates there you comment about to to tile curious in just seeing I if product with customer. that are the increase And your some mentioned the or you're for there inventory tie of innovation in are Thanks. seeing there. that that the guys color and the often You some subway out just relating some things was new

Ersan Sayman

Ersan. is This

We getting Large-format wider accepting continue by customers. bigger, like our our -- traction. to and our longer accepted products still get see by products more

and get still sales Of than as vinyl’s we and can. course, continued company every much average in newness category more and as we innovation also laminate

Joseph Feldman

Great. Thanks. And congrats Trevor.

Operator

comes Sorry Markets. about and Antony. from last from that. next The Loop Anthony Capital you. Chukumba question Thank ahead, Go

Anthony Chukumba

deserved. to just wondering those footprint point? are of update expectations. just learning’s design Thank covered any you been From how be? what casting key position, first for a it's on my sort Trevor thought I that off, Obviously, were from relative the so much what well the studios are met this at in my And congratulations, was you. question. give have central of my for the time squeezing terms if long-term call. CEO terms what perspective. five store very, Thank think the lot so you any on performing not very And things if in you first of you, a you your of I a been surprise have you big update could can the I -- your

Trevor Lang

We're pleased another Dallas have. now We're & our the -- it's I'm month next in with which like up ramp open an a next and have Decor. the so. two the don't that opening we'll store, got for I opened the opening one would things say, first, term, how many longer, I Floor update ones work continued We've have in five to been one lot Atlanta. up here how in a long running progress. That's today. or in Atlanta

a stores, pleased in off better is little bit attracting off. had that. we're which think little We designers about bit We're store. in getting a really The into lot store learning those with the So stores. a customer, ones we what started hoped started Dallas than It different the we're the continues. tracking new have architects

just sure company we look, a settle. time, we far, too update the the bit And Give always We're about idea. good. get open. -- next of say we're on piloting a it us thinking make We let us we'll want the next quick to we that that and -- don't and so then this. would you a to I a right. But think is. We're it's always get go So with future it's what not so one going

Anthony Chukumba

luck of the Good year. rest it. the Got on

Tom Taylor

Thank you.

call I'll about So Trevor you We're Décor. questions. transitions interest guys job, again in that work, Thank your a Floor appreciated. promotion. do was into that to listening, thank next To all he the Thank well-deserved your thanking can next we'll Congratulations And his on he your with all call. associates Decor. last role excited you. you hard on for close you to question, so for Floor greatly & are you by all what the the incredible & talk those for as

Operator

does you. your today's you We participation. This Thank conclude for conference. thank

your disconnect at this have lines time, may You and day. wonderful a

Floor & Decor (FND) 5 Aug 222022 Q2 Earnings call transcript