Floor & Decor Holdings, Inc. (NYSE:FND) Q2 2020 Earnings Conference Call - Final Transcript

Jul 30, 2020 • 05:00 pm ET


Floor & Decor Holdings, Inc. (NYSE:FND) Q2 2020 Earnings Conference Call - Final Transcript


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Thomas Taylor

a safer environment for our Pro and do-it-yourself customers.

It is obvious the COVID-19 is not going away anytime soon, but all the changes we have implemented gives me confidence we can operate in a much safer store environment as long as COVID-19 is with us. Because of the pandemic, people are spending a lot more time in their homes and not spending as much on travel, eating out and other entertainment. The combination of these two phenomenas has people investing in their homes. Floor & Decor is in a great position to serve them with visually inspiring stores and website, innovative assortments, everyday low prices and in-stock job lock quantities as consumers search for the best value and current trends.

Also, our aggressive efforts to lower cost in the short term, along with adding $75 million of additional Term B loan, the majority, which is not due until 2027, has fortified an already strong balance sheet, and we now have the best liquidity in our Company's history. This positions us to withstand this period of uncertainty while at the same time, continuing to make important investments to support our long-term growth goals. I believe our future is bright.

Looking more specifically at our second quarter results, we opened two new warehouse stores in the second quarter of 2020, one in Novi, Michigan and one in Elizabeth, New Jersey. The second quarter openings brought the total number of warehouse stores that we operate to 125 stores, up 18% from 106 warehouse stores at the end of the second quarter of 2019.

Looking at the third quarter of 2020, we have already opened our third store in Salt Lake City area and our first small store design studio in Dallas, Texas. We also have plans to open a new store in Toms River, New Jersey in August; and San Diego, California in September as we further build out and scale our stores nationwide. Despite the new store development headwinds caused by COVID-19, we are pleased with our planned 2020 new store openings, which now include 13 new warehouse stores, up from our most recent estimate of 11 stores.

As we look to 2021, we are committed to returning to 20% new store growth and excited about the new store pipeline. In addition, we expect to achieve more balanced cadence of openings throughout 2021. As we have discussed, we are taking partnership approach with our landlords and are encouraged that our landlords recognize that we are one of the few retailers that have plans to open stores over the long run. We are already seeing real estate opportunities that we believe are better than before the pandemic started.

Moving on to our comparable store sales. Our second quarter comparable store sales declined 20.8% due to COVID-19 and the associated declining transactions caused by our store closures, not allowing customers into our stores throughout much of the quarter and reducing operating hours. Comparable store transactions declined 22.3%, and our comparable store average ticket