Putting the pedal to the Floor
Floor & Decor has kept its word when it comes to store openings in 2022 and beyond.
The company raced past its 150-store milestone last year with a new location South Austin, Texas. And in the past two months, the home improvement and specialty flooring retailer has opened new warehouse-format stores in California, Georgia, Louisiana, Illinois, Maryland, North Carolina and Ohio.
With this latest surge of store openings, Floor & Decor now operates more than 170 stores and 5 design centers in 34 states.
The rapidly-expanding retailer has set sights on opening 9 stores in the second quarter of 2022 and many as 32 locations in total this year. Long-term projections call for the Atlanta, Ga.-based retailer to open up to 500 new locations over the next 8 to 10 years.
Sales at Floor & Decor have been better than solid. It reported that its first quarter 2022 sales jumped nearly 32 percent to $1.03 billion from sales of $782.5 million in the prior first quarter while comparable store sales increased 14.3 percent for the period. Looking back at its 2021 fullyear performance, Floor & Decor sales jumped 41.5 percent to $3.43 billion from sales of $2.43 billion in 2020.
“We just completed our most successful year on record in 2021, and we are incredibly proud of what we have achieved over the last decade, but we still believe our best days are yet in the future,” Tom Taylor, CEO of Floor & Decor said earlier this year.
Taylor, who achieved retail distinction as being the youngest person (at the age of 22) to manage a Home Depot location, was a fast-rising executive at the home improvement giant. He worked his way up through various manager, district manager, vice president, president, and senior vice president roles to eventually serve as the Executive Vice President of Operations with responsibility for all 2,200 Home Depot stores and then the Executive Vice President of Merchandising and Marketing.
Taylor joined Floor & Decor in December 2012 as CEO and board member.
When taking into account the rapid expansion and strong sales growth at Floor & Decor, strategies implemented by the retailer have been paying off royally.
For example, as many parts of the industry faced supply chain challenges, Floor & Decor managed to avoid that hurdle.
According to Chief Financial Officer Trevor Lang, the company made the decision to increase its in-stock inventory for six quarters in a row.
The move paid off with inventory always be available for sales. And with so many new store openings, any excess inventory can be shared with another location.
“Our stock levels have been a competitive advantage during pandemic and beyond,” Lang said during a presentation in June at the Baird 2022 Global Consumer, Technology & Services Conference. “We feel comfortable with where we are at this point and in better shape than we’ve been in the last 18 months.”
Another advantage Floor & Decor has, according to Lang, is its seasonal adjustments. Although the retailer keeps up with trends and changes in flooring, it’s not having to completely overhaul its inventory selection seasonally or quarterly.
Pros are also a big part of the equation. Each location has a dedicated pro services desk along with sales personnel focused on bringing in more dollars from contractor sales. Floor & Decor is targeting commercial sales as well, including architects, design firms, and hotels, with sales staff dedicated to big projects.
Each store’s design center provides another boost to sales.
“That’s driving our ticket as we have the ability to upsell the whole project,” Lang says.
Floor & Decor will report sales and earnings for the second quarter of 2022 on Aug. 4.
(This article originally appeared in the June 2022 edition of HBSDealer.)