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.
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.
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.