$FND, an American $8 billion market cap big-box retailer specialized in hard-surfaced flooring, has compounded both revenue and EBIT per share by almost 30% annually for a decade.
Let's take a look at some highlights from Floor & Decor's Investor Day 2022 🧵
Let's take a look at some highlights from Floor & Decor's Investor Day 2022 🧵
$FND operates ~20 million square feet, split over 190+ locations in 36 U.S. states. It's the largest chain of its kind, dedicated to hard-surface flooring.
Management now envision a path to 500 stores, growing ~20% per year for the foreseeable future.
Management now envision a path to 500 stores, growing ~20% per year for the foreseeable future.
$FND's massive warehouse stores carries an unmatched inventory, sourcing material from suppliers from 24 different countries.
"The 78,000 square feet store gives us the ability to carry every hard surface flooring category under one roof."
"The 78,000 square feet store gives us the ability to carry every hard surface flooring category under one roof."
"By year 3 we're doing double that of what was in the old model. [...] 50% on a third year cash on cash return."
Here's Bryan Dodge talking about the unit economics and return profile of opening stores with the new more upfront-expensive model:
Here's Bryan Dodge talking about the unit economics and return profile of opening stores with the new more upfront-expensive model:
!["By year 3 we're doing double that of what was in the old model. [...] 50% on a third year cash on c...](https://pbs.twimg.com/media/FmDzAYfX0AUJG_I.png)
!["By year 3 we're doing double that of what was in the old model. [...] 50% on a third year cash on c...](https://pbs.twimg.com/media/FmDzJ_aX0CUDNEb.jpg)
!["By year 3 we're doing double that of what was in the old model. [...] 50% on a third year cash on c...](https://pbs.twimg.com/media/FmDzMQ0X0AAOtWG.jpg)
And just like, for example, IKEA, $FND has built a cost-efficient distribution network by eliminating expensive middlemen. This, to keep prices low.
"We're going to continue to be the leader in low price, broad, trend right assortment."
"We're going to continue to be the leader in low price, broad, trend right assortment."
Hard-surfaced flooring is a growing category, taking market share mainly from carpet:
As $FND grows in size it gets more efficient and can therefore take on more parts of the U.S. profitably, hence their raised guidance from 400 to 500 stores:
$FND is expected to ~double its EBIT ny 2024 (as compared to 2021):
This excerpt was amazing. $FND's Executive VP & CFO about the company's capital allocation framework, talking about ROIC and FCF, and about their history of being PE-owned and highly levered:
$FND's Long-term Financial Objectives:
"We are very confident, based on a decade of doing this, that we're going to get at least a 25% ROIC for those stores"
Over the coming years, to support its 500 store growth target, $FND will spend 60-70% of its capital on new stores and 10-25% on distribution centers:
Over the coming years, to support its 500 store growth target, $FND will spend 60-70% of its capital on new stores and 10-25% on distribution centers:
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