What happened
Shares of Floor & Decor (FND 1.92%) jumped 28% in July, according to data from S&P Global Market Intelligence.
This surge narrows the specialty retailer's year-to-date share losses to 38.2%, down from 51.7% before the surge.
Image source: Getty images.
So what
Floor & Decor's shares rose in tandem with a broad recovery in the Nasdaq Composite Index and S&P 500 Index for July. The former rose 12.3% for the month while the latter recovered by 9.1%. Investors are still digesting the news over high inflation and the Federal Reserve's intention to raise interest rates aggressively to contain it, but they seem much less pessimistic about company earnings than in the prior three months.
NYSE: FND
Key Data Points
Not that Floor & Decor has anything to worry about. The company's first-quarter results, released in May, demonstrated strong top-line growth, with net sales jumping 31.5% year over year to $1.03 billion. Comparable-store sales also increased by 14.3% year over year, but higher costs led to a slight 2.1% year-over-year dip in operating income and a 6.4% year-over-year decline in net income. The company also opened six new warehouse stores during the quarter, along with three design studios.
Now what
The flooring specialist continues to report strong revenue growth for its second quarter, with net sales jumping by 26.7% year over year to $1.09 billion and comparable-store sales improving by 9.2% year over year. Floor & Decor carried on with its ambitious expansion plan, opening another nine new warehouse stores for the quarter. The company ended the quarter with 174 stores and five design studios.
Floor & Decor isn't stopping there, though, and has mapped out an aggressive expansion plan to grow its store base by 20% every year till 2024. By then, it projects that it will have 275 stores in the U.S. as it caters to a total addressable market of between $49 billion to $54 billion. The company's customer loyalty program allows customers to earn points from purchases that they can redeem for rewards or enjoy savings. Close to six in 10 customers are enrolled in the premier rewards program, and their spending is triple that of unenrolled customers. Floor & Decor continues to engage customers through omnichannel initiatives, allowing customers to shop easily in-store or online and offering the option to buy online and pick up in-store.
With its dominant market share, knowledge of hard and soft surfaces, and large potential addressable market, the company should see its sales and profits climb steadily over time.
