What happened

Shares of Floor & Decor Holdings (NYSE: FND), a retailer of flooring products, rose sharply at the open on Friday, gaining as much as 13% in morning trading. The big story was the company’s second-quarter 2022 earnings release, which hit the market after the close on Thursday.

So what

On the top line, Floor & Decor witnessed a 26.7% year-over-year sales increase. But the retailer has been opening new stores (it opened nine in the second quarter alone), a move that boosts the top line but might not actually be indicative of a strong underlying business.

Which is why the solid 9.2% year-over-year gain in same-store sales was so impressive, given that the company’s existing operations appear to be doing just fine.

On the bottom line, Floor & Decor reported adjusted earnings per share of $0.76 in the second quarter, up around 4% year over year. That’s notable on a couple of fronts.

First, the company lapped record results in the second quarter of 2021, so this was a hard comparison, but the flooring retailer managed to increase earnings just the same.

And second, as with most companies today, Floor & Decor is dealing with headwinds from inflation. Costs were up materially year over year, but management appears to be handling the issue pretty well.

Now what

Although Floor & Decor narrowed its sales expectations and lowered its earnings outlook for 2022, which isn’t great, the moves seem appropriate given rising costs and a slowing housing market.

Today, however, it looks as if investors might have been focusing more on the strong quarter than the future, noting that Floor & Decor beat on both the top and bottom lines. Investors like it when that happens.

Reuben Gregg Brewer has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.