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What changed in Floor & Decor Holdings, Inc.'s 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of Floor & Decor Holdings, Inc.'s 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+241 added−261 removedSource: 10-K (2026-02-19) vs 10-K (2025-02-20)

Top changes in Floor & Decor Holdings, Inc.'s 2025 10-K

241 paragraphs added · 261 removed · 200 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

57 edited+9 added−11 removed28 unchanged
Biggest changeWe reward our associates for their hard work on behalf of Floor & Decor and provide a variety of incentives to allow associates to share in the Company’s success, including (i) incentive compensation plans for all associates, (ii) a 401(k) plan with Company-sponsored match, (iii) health care benefits for full-time associates, (iv) an employee stock purchase plan that facilitates purchases of Company stock at a discount by eligible associates, and (v) other benefits such as an employee assistance program. 9 Table of Contents Government Regulation We are subject to extensive and varied federal, state, and local laws and regulations that impact us, our operations, properties, and suppliers, including those relating to employment, the environment, protection of natural resources, import and export, advertising, labeling, public health and safety, product safety, zoning, fire codes, and other operations of our retail stores and distribution facilities.
Biggest changeWe reward our associates for their hard work and provide a variety of incentives to allow associates to share in the Company’s success, including (i) incentive compensation plans for all associates, (ii) a 401(k) plan with Company-sponsored match for eligible associates, (iii) health care benefits for full-time associates, (iv) an employee stock purchase plan that facilitates purchases of Company stock at a discount by eligible associates, and (v) other benefits such as an employee assistance program.
We offer an easy-to-navigate store layout with clear lines of sight and departments organized by our major product categories, and we invest heavily in large, visually inspiring merchandise displays that showcase our assortment as well as marketing throughout our stores to highlight product features, benefits, and design elements.
We offer an easy-to-navigate store layout with clear lines of sight and departments organized by our major product categories. We invest heavily in large, visually inspiring merchandise displays that showcase our assortment as well as marketing throughout our stores to highlight product features, benefits, and design elements.
Rewarding our Pro customers through this program is intended to improve their loyalty to Floor & Decor, and by serving the needs of Pro customers, we drive repeat and high-ticket purchases, customer referrals, and brand awareness from this attractive and loyal customer segment. 5 Table of Contents Decentralized Culture with an Experienced Store-Level Team and Emphasis on Training.
Rewarding our Pro customers through this program is intended to improve their loyalty to Floor & Decor, and by serving the needs of Pro customers, we drive repeat high-ticket purchases, customer referrals, and brand awareness from this attractive and loyal customer segment. 5 Table of Contents Decentralized Culture with an Experienced Store-Level Team and Emphasis on Training.
We have a decentralized culture that empowers managers at the store and regional levels to make key decisions to maximize the customer experience. Our store managers, who carry the title Chief Executive Merchant (“CEM”), have significant flexibility to customize product mix, pricing, marketing, merchandising, visual displays, and other elements in consultation with their regional leaders.
We have a decentralized culture that empowers managers at the store and regional levels to make key decisions to maximize the customer experience. Our store managers, who carry the title Chief Executive Merchant (“CEM”), have significant flexibility to localize product mix and customize pricing, marketing, merchandising, visual displays, and other elements in consultation with their regional leaders.
We work with our suppliers to quickly introduce new products and styles in our stores. We appeal to a wide range of customers through our “good/better/best” merchandise selection, our broad range of product styles from classic to modern, and our new trend-forward products. We consistently innovate with proprietary brands. • Low Prices .
We work with our suppliers to quickly introduce new products and styles in our stores. We appeal to a wide range of customers through our “good/better/best” merchandise selection, our broad range of product styles from classic to modern, and our new trend-forward products. We consistently innovate with proprietary brands. • Everyday Low Prices .
Through our site selection process, we evaluate key market characteristics including age of homes, housing density, length of home ownership, median income, competitor concentration, and other demographic variables in both new and existing markets.
Through our site selection process, we evaluate key market characteristics including age of homes, housing density, home ownership, median income, competitor concentration, and other demographic variables in both new and existing markets.
We anticipate that the planned expansion of our store base and growth in comparable store sales will also support increasing economies of scale over the long-term while still making significant investments in our business. Our Industry Floor & Decor operates in the large, growing, and highly fragmented U.S. retail hard surface flooring market and commercial surfaces market.
We anticipate that the planned expansion of our store base and improvement in comparable store sales will also support increasing economies of scale over the long-term while still making significant investments in our business. Our Industry Floor & Decor operates in the large, growing, and highly fragmented U.S. retail hard surface flooring market and commercial surfaces market.
We carry a comprehensive in-stock, trend-forward product assortment with on average approximately 4,400 stock keeping units (“SKUs”) in each store, which, based on our market experience, is a far greater in-stock offering than any other flooring retailer. Additionally, we customize our product assortment at the store level for the local preferences of each market.
We carry a comprehensive in-stock, trend-forward product assortment with on average approximately 4,200 stock keeping units (“SKUs”) in each store, which, based on our market experience, is a far greater in-stock offering than any other flooring retailer. Additionally, we customize our product assortment at the store level for the local preferences of each market.
We intend to open a range of store sizes from 50,000 to 80,000 square feet to serve different expected market sales potentials to achieve our desired rate of return over the long-term. When opening new stores, inventory orders are placed several months prior to a new store opening.
We intend to open a range of store sizes from 50,000 to 75,000 square feet to serve different expected market sales potentials to achieve our desired rate of return over the long-term. When opening new stores, inventory orders are placed several months prior to a new store opening.
Distribution and Order Fulfillment Merchandise inventory is our most significant working capital asset and is considered “in-transit” or “available for sale,” based on whether we have physically received the products at an individual store location or in one of our four distribution centers.
Distribution and Order Fulfillment Merchandise inventory is our most significant working capital asset and is considered “in-transit” or “available for sale,” based on whether we have physically received the products at an individual store location or in one of our five distribution centers.
We have established a Global Sourcing and Compliance Department to, among other things, enhance our policies and procedures with respect to addressing compliance with applicable regulatory bodies, including compliance with the requirements of the Lacey Act, the California Air Resources Board, and the Environmental Protection Agency.
We have an established Global Sourcing and Compliance Department to, among other things, enhance our policies and procedures with respect to addressing compliance with applicable regulatory bodies, including compliance with the requirements of the Lacey Act, the California Air Resources Board, and the Environmental Protection Agency.
We appeal to a variety of customers, including professional installers and commercial businesses (“Pro”) and homeowners, which are comprised of do-it-yourself customers (“DIY”) and buy-it-yourself customers who buy the products for professional installation (“BIY”). 4 Table of Contents Our warehouse-format stores, which average approximately 77,000 square feet, are typically larger than any of our specialty retail flooring competitors’ stores.
We appeal to a variety of customers, including professional installers and commercial businesses (“Pro”) and homeowners, which are comprised of do-it-yourself customers (“DIY”) and buy-it-yourself customers, who buy our products for professional installation (“BIY”). 4 Table of Contents Our warehouse-format stores, which average approximately 76,000 square feet, are typically larger than any of our specialty retail flooring competitors’ stores.
We also believe that growing our proprietary credit offering, Pro, Commercial, and design strategies, further integrating connected customer strategies, and enhancing other key information technology, will contribute to increased comparable store sales. As we increase awareness of Floor & Decor’s brand, we believe there is a significant opportunity to gain additional market share. Enhance Our “Connected Customer” Experience.
We also believe that growing our Pro, Commercial, and design strategies, further integrating connected customer strategies, and enhancing other key information technology, will contribute to increased comparable store sales. As we increase awareness of Floor & Decor’s brand, we believe there is a significant opportunity to gain additional market share. Enhance Our “Connected Customer” Experience.
Because approximately 55% of our stores have been open for less than five years, we believe they will continue to drive comparable store sales growth as newer stores ramp up to maturity.
Because approximately 50% of our stores have been open for less than five years, we believe they will continue to drive comparable store sales growth as newer stores ramp up to maturity.
Our Products Our merchandise is comprised of the following major product categories: • Laminate and vinyl : Wood-based laminate flooring, luxury vinyl, and engineered/composite rigid core vinyl. • Tile : Porcelain and ceramic tile, porcelain mosaics, and porcelain tile slabs. • Installation materials and tools : Grout, mortar, backer board, tools, adhesives, underlayments, moldings, and stair treads. • Decorative accessories and wall tile : Decorative tiles and mosaics, which includes natural stone, porcelain, ceramic, and glass, wall tile, and decorative trims. • Wood : Solid prefinished hardwood, solid unfinished hardwood, engineered hardwood, bamboo, and wood countertops. • Natural stone : Marble, limestone, travertine, slate, ledger, prefabricated countertops, thresholds, and shower benches. • Adjacent categories : Vanities, shower doors, bath accessories, faucets, sinks, custom countertops, bathroom mirrors, and bathroom lighting.
Our Products Our merchandise is comprised of the following major product categories: • Laminate and vinyl : Wood-based laminate flooring, luxury vinyl, and engineered/composite rigid core vinyl. • Tile : Porcelain and ceramic tile, porcelain mosaics, and porcelain tile slabs. • Installation materials and tools : Grout, mortar, backer board, tools, adhesives, underlayments, moldings, and stair treads. • Decorative accessories and wall tile : Decorative tiles and mosaics, which includes natural stone, porcelain, ceramic, and glass, wall tile, and decorative trims. • Wood : Solid prefinished hardwood, solid unfinished hardwood, engineered hardwood, bamboo, and wood countertops. • Natural stone : Marble, limestone, travertine, slate, and ledger. • Adjacent categories : Vanities, shower doors, bath accessories, faucets, sinks, custom countertops, bathroom mirrors, bathroom lighting, and kitchen cabinets.
The following discussion contains references to fiscal 2025, fiscal 2024, fiscal 2023, fiscal 2022, fiscal 2021, and fiscal 2020, which represent our fiscal years ended or ending, respectively, December 25, 2025, December 26, 2024, December 28, 2023, December 29, 2022, December 30, 2021, and December 31, 2020.
The following discussion contains references to fiscal 2026, fiscal 2025, fiscal 2024, fiscal 2023, fiscal 2022, and fiscal 2021, which represent our fiscal years ended or ending, respectively, December 31, 2026, December 25, 2025, December 26, 2024, December 28, 2023, December 29, 2022, and December 30, 2021.
Fiscal years 2025, 2024, 2023, 2022, and 2021 are 52-week periods, and fiscal 2020 is a 53-week period. When a 53-week fiscal year occurs, the Company reports the additional week at the end of the fiscal fourth quarter.
Fiscal years 2025, 2024, 2023, 2022 and 2021 are 52-week periods, and fiscal 2026 is a 53-week period. When a 53-week fiscal year occurs, the Company reports the additional week at the end of the fiscal fourth quarter.
Refer to Note 2, “Revenue” of the notes to our consolidated financial statements included in this Annual Report for our net sales by major product category. 7 Table of Contents Connected Customer We aim to elevate the total customer experience through our website FloorandDecor.com .
Refer to Note 2, “Revenue” of the notes to our consolidated financial statements included in this Annual Report for our net sales by major product category. Connected Customer We aim to elevate the total customer experience through our website FloorandDecor.com .
We provide an efficient one-stop shopping experience for our Pro customers, offering everyday low prices on a broad selection of high-quality flooring products, deep inventory levels to support immediate availability of our products, credit offerings, free storage for purchased inventory, the convenience of early store hours, and separate entrances for merchandise pick-up.
We provide an efficient one-stop shopping experience for our Pro customers, offering everyday low prices on a broad selection of high-quality flooring products, deep inventory levels to support immediate availability of our products, credit offerings, free storage for purchased inventory, convenient store hours, and separate entrances for merchandise pick-up.
These features educate our customers and enable them to visualize how the product would look in their homes or businesses. The majority of our stores have design centers, with multiple different vignettes that showcase project ideas to further inspire our customers, and we employ experienced designers in all of our stores to provide free design consulting.
These features educate our customers and enable them to visualize how the product would look in their homes or businesses. Our stores have design centers, with multiple different vignettes showcasing project ideas to further inspire our customers. We employ experienced designers in all of our stores to provide free design consulting.
We believe that long-term growth in the hard surface flooring market will continue to be driven by several home remodeling demand drivers. These include a large supply of aging homes, existing-home sales, rising home equity values, and the secular shift from carpet to hard surface flooring.
We believe that long-term growth in the hard surface flooring market will continue to be driven by several home remodeling demand drivers. These include existing home sales, aging homes, rising home equity values, and the secular shift from carpet to hard surface flooring.
Led by our Chief Executive Officer, Tom Taylor, our management team brings substantial expertise from leading retailers and other companies across various core functions, including store operations, merchandising, marketing, real estate, e-commerce, supply chain management, finance, legal, and information technology.
Led by our Chief Executive Officer, Brad Paulsen, our management team brings substantial expertise from leading retailers and other companies across various core functions, including store operations, merchandising, marketing, real estate, e-commerce, supply chain management, finance, legal, and information technology.
Based on these characteristics, we believe there is a significant opportunity to expand our warehouse-format store base from 251 stores as of December 26, 2024 to at least 500 in the United States over the long-term. We plan to target store openings in new and existing markets across various market sizes.
Based on these characteristics, we believe there is a significant opportunity to expand our warehouse-format store base from 270 stores as of December 25, 2025 to at least 500 in the United States over the long-term. We plan to target store openings in new and existing markets across various market sizes.
Enhancements to our connected customer experience are critical to our increasingly interconnected customers who often perform extensive online research for their project before going to our store. FloorandDecor.com is an important tool for engaging our homeowner customers throughout their process.
Enhancements to our connected customer experience are critical to our increasingly interconnected customers who often perform extensive online research for their project before or after going to our store. Our website is an important tool for engaging our homeowner customers throughout their process.
Floor & Decor Holdings, Inc. was incorporated as a Delaware corporation in October 2010 in connection with the acquisition of Floor and Decor Outlets of America, Inc. in November 2010 by our previous sponsor owners. As of December 26, 2024, we operated 251 warehouse-format stores and five small-format design studios across 38 states.
Floor & Decor Holdings, Inc. was incorporated as a Delaware corporation in October 2010 in connection with the acquisition of Floor and Decor Outlets of America, Inc. in November 2010 by our previous sponsor owners. As of December 25, 2025, we operated 270 warehouse-format stores and five small-format design studios across 39 states.
Our Chief Human Resources Officer, supported by the entire executive team, is responsible for developing and executing our human capital strategy. This includes the attraction, development, engagement, safety, and retention of talent and the design of associate compensation and benefits programs. As of December 26, 2024, we had 13,690 employees, 10,413 of whom were full-time.
Our Chief Human Resources Officer, supported by the entire executive team, is responsible for developing and executing our human capital strategy. This includes the attraction, development, engagement, safety, and retention of employees and the design of associate compensation and benefits programs. As of December 25, 2025, we had 13,723 employees, 10,469 of whom were full-time.
Additionally, we provide a robust online experience for potential customers on FloorandDecor.com . Extensive Service Offerings to Enhance the Pro Customer Experience.
Additionally, we provide a robust online experience for potential customers on our website. Extensive Service Offerings to Enhance the Pro Customer Experience.
You may access our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports, as well as other reports relating to us that are filed with, or furnished to, the Securities and Exchange Commission (the “SEC”) free of charge on the Investor Relations page of our website as soon as reasonably practicable after such material is electronically filed with, or furnished to, the SEC.
You may access our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports, as well as other reports relating to us that are filed with, or furnished to, the Securities and Exchange Commission (the “SEC”) free of charge on the Investor Relations page of our website.
We also offer design services through our experienced designers, which helps our Pro customers serve their customers. Additionally, each store has a dedicated Pro sales force with technology to service our Pro customer more efficiently. We have a Pro loyalty rewards program, which rewards Pro customers based on purchases and provides business-building tools.
Each store has a dedicated Pro sales force with technology to service our Pro customers more efficiently. We also offer design services through our experienced designers, which helps our Pro customers serve their customers. We have a Pro Premier loyalty program, which rewards Pro customers based on purchases.
In fiscal 2021, we acquired Spartan Surfaces, LLC (“Spartan”), a seller of commercial surfaces. We intend to continue to focus on both organic and inorganic growth to address the entire commercial surfaces market. Enhance Margins Through Increased Operating Leverage.
In fiscal 2021, we entered the commercial surfaces market by acquiring Spartan Surfaces, LLC (“Spartan”). We intend to continue to focus on both organic and inorganic growth to address the entire commercial surfaces market. Enhance Margins Through Increased Operating Leverage.
As of December 26, 2024, we have four distribution centers strategically located across the United States in port cities near Savannah, Houston, Los Angeles, and Baltimore and a transload facility near Los Angeles.
As of December 25, 2025, we have five distribution centers strategically located across the United States in port cities near Savannah, Houston, Los Angeles, Baltimore, and Seattle and a transload facility near Los Angeles.
We create and implement localized assortments that are trend-forward, which often set trends in the industry. We believe this approach differentiates us from our national competitors, who tend to have standardized assortments across markets. Throughout the year, we regularly train our employees on a variety of topics, including product knowledge, sales strategies, leadership, and store operations.
We believe this approach differentiates us from our national competitors, who tend to have standardized assortments across markets. Throughout the year, we regularly train our employees on a variety of topics, including product knowledge, sales strategies, leadership, and store operations.
Human Capital We have built a strong team of employees to support our continued success. Each of our stores is led by a CEM and is supported by an operations manager, product category department managers, a design team, a Pro sales and support team, and a number of additional associates.
Each of our stores is led by a CEM and is supported by an operations manager, product category department managers, a design team, a Pro sales and support team, and a number of additional associates.
We carry an extensive range of products, including flooring and decorative accessories, as well as installation materials and tools, to fulfill a customer’s entire flooring project. In addition, we have adjacent categories such as vanities, bathroom accessories, shower doors, and custom countertops. Our stores carry a large in-stock assortment and job size quantities to differentiate us from our competitors.
We carry an extensive range of products, including flooring and decorative accessories, as well as installation materials and tools, to fulfill a customer’s entire flooring project. In addition, we have adjacent categories such as vanities, bathroom accessories, shower doors, custom countertops, and kitchen cabinets.
We procure the majority of our products directly from manufacturers, which eliminates additional costs from exporters, importers, wholesalers, and distributors. Direct sourcing is a key competitive advantage, as many of our specialty retail flooring competitors are too small to have the scale or the resources to work directly with suppliers. Highly Experienced Management Team.
Direct sourcing is a key competitive advantage, as many of our specialty retail flooring competitors are too small to have the scale or the resources to work directly with suppliers. Highly Experienced Management Team.
Our ability to purchase directly from manufacturers through our direct sourcing model enables us to be fast to market with a balanced assortment of best-seller and unique, hard-to-find items that are the latest trend-forward products.
Our ability to purchase directly from manufacturers through our direct sourcing model enables us to offer our products at everyday low prices and be fast to market with a balanced assortment of best-seller and trend-forward products.
Our store managers and store department managers are an integral part of our company, and many have years of relevant industry experience in retail. Sophisticated, Global Supply Chain. Our merchandising team has developed direct sourcing relationships with manufacturers and quarries in 26 countries.
Our store managers and store department managers are an integral part of our company, and many have years of relevant industry experience in retail. Sophisticated, Global Supply Chain. Our merchandising team has developed direct sourcing relationships with more than 240 vendors in the U.S. and around the world and has long-term relationships with many of them.
Of the total employees, 11,717 work in our stores, 1,440 work in our store support center, customer care, or similar functions, 523 work in our distribution centers, and 10 work in our Asia sourcing office in Shanghai, China.
Of the total employees, 11,790 work in our stores, 1,382 work in our store support center, customer care, or similar functions, 541 work in our distribution centers, and 10 work in our Asia sourcing office in Shanghai, China. Currently none of our associates are represented by a union.
We have sought to integrate technology into all facets of our business, including supply chain, merchandising, store operations, point-of-sale, e-commerce, finance, accounting, and human resources. The integration of technology allows us to analyze the business in real time and react accordingly. Our inventory management system is our primary tool for forecasting and placing orders and managing in-stock inventory.
Management Information Systems Technology plays a crucial role in the continued growth and success of our business. We have sought to integrate technology into all facets of our business, including supply chain, merchandising, store operations, point-of-sale, e-commerce, finance, accounting, and human resources. The integration of technology allows us to analyze the business in real time and react accordingly.
The data-driven platform includes sophisticated forecasting tools based on historical trends in sales, inventory levels, and vendor lead times at the store and distribution center level by SKU, allowing us to support store managers in their regional merchandising efforts. We rely on the forecasting accuracy of our system to maintain the in-stock, job-lot quantities that our customers rely on.
Our inventory management system is our primary tool for forecasting and placing orders and managing in-stock inventory. The data-driven platform includes sophisticated forecasting tools based on historical trends in sales, inventory levels, and vendor lead times at the store and distribution center level by SKU, allowing us to support store managers in their localized merchandising efforts.
The cost savings we achieve by directly sourcing our merchandise enable us to offer our customers everyday low prices. Additionally, our close relationships with suppliers allow us to collaborate with them directly to develop and quickly introduce innovative and quality products that meet our customers’ evolving tastes and preferences.
Additionally, our close relationships with suppliers allow us to collaborate with them directly to develop and quickly introduce innovative and quality products that meet our customers’ evolving tastes and preferences.
We continuously invest in our connected customer strategies to improve how customers experience our brand. Our connected customer sales represented approximately 19% of our total net sales for fiscal 2024. Continue to Invest in the Pro Customer. We believe our differentiated focus on Pro customers has created a competitive advantage for us and will continue to drive sales growth.
We continuously invest in our connected customer strategies to help customers discover and engage with our brand and products across the shopping journey. Continue to Invest in the Pro Customer. We believe our differentiated focus on Pro customers has created a competitive advantage for us and will continue to drive sales growth.
To this end, we believe the website provides not only the same region-specific product selection that customers can expect in our stores, but also the opportunity to extend our assortment by offering our entire portfolio of products.
To this end, we believe the website provides not only the same localized product selection that customers can expect in our stores, but also the opportunity to extend our assortment by offering our entire portfolio of products. 7 Table of Contents In addition to highlighting our broad product selection, our website offers a convenient opportunity for customers to purchase products online and pick them up in our stores or have them delivered.
In 2024, we began an upgrade to our existing core financial and merchandising systems, which is expected to occur in phases over the next few years. Competition The retail hard surface flooring market is highly fragmented and competitive. We face significant competition from big-box home improvement centers, national and regional specialty flooring retailers, independent flooring retailers, and distributors.
The implementation is expected to go-live in phases through 2027. 8 Table of Contents Competition The retail hard surface flooring market is highly fragmented and competitive. We face significant competition from big-box home improvement centers, national and regional specialty flooring retailers, independent flooring retailers, and distributors.
We believe that we compete favorably with respect to these factors by providing a highly diverse selection of products to our customers, at an attractive value, in appealing and convenient retail stores. For further discussion regarding competition, refer to Item 1A, “Risk Factors” of Part I of this Annual Report.
We believe that we compete favorably with respect to these factors by providing a highly diverse selection of products to our customers, at an attractive value, in appealing and convenient retail stores. Human Capital We have built a strong team of employees to support our continued success.
We operate our business in accordance with standards and procedures designed to comply with applicable laws and regulations. Compliance with these laws and regulations has not historically had a material effect on our capital expenditures, earnings, competitive position, financial condition, or operating results; however, the effect of compliance in the future cannot be predicted.
Compliance with these laws and regulations has not historically had a material effect on our capital expenditures, earnings, competitive position, financial condition, or operating results; however, the effect of compliance in the future cannot be predicted. 9 Table of Contents Trademarks and Other Intellectual Property We have registered trademarks and several pending trademark applications in the United States and other countries on a number of our brands, slogans, and products.
Our stores are typically designed with warehouse features including high ceilings, clear signage, bright lighting, and industrial racking and are staffed with knowledgeable store associates.
Customers also have access to our full catalog of inventory for in-store pickup or delivery through our website. Unique and Inspiring Shopping Environment. Our stores are typically designed with warehouse features including high ceilings, clear signage, bright lighting, and industrial racking and are staffed with knowledgeable store associates.
We believe this system helps service levels, reduces shrink and damage, helps us better manage our inventory, and allows us to better implement our connected customer initiatives. We plan to continue to seek further opportunities to enhance our distribution capabilities and align them with our strategic growth initiatives.
We believe these systems reduce shrink and damage and help us better manage our inventory. We plan to continue to seek further opportunities to enhance our distribution capabilities and align them with our strategic growth initiatives. In particular, we anticipate opening an additional distribution center near Baltimore.
Trademarks and Other Intellectual Property We have registered trademarks and several pending trademark applications in the United States and other countries on a number of our brands, slogans, and products. We regard our intellectual property, including our many proprietary brands, as having significant value, and our brand is an important factor in the marketing and merchandising of our products.
We regard our intellectual property, including our many proprietary brands, as having significant value, and our brand is an important factor in the marketing and merchandising of our products. Accordingly, we have taken, and continue to take, appropriate steps to protect our intellectual property. Seasonality Historically, our business has had very little seasonality on a quarterly basis.
Accordingly, we have taken, and continue to take, appropriate steps to protect our intellectual property. Seasonality Historically, our business has had very little seasonality. Our specialty hard surface flooring and decorative home product offering makes us less susceptible to holiday shopping seasonal patterns compared to other retailers. Available Information We maintain a website at www.FloorandDecor.com.
Our specialty hard surface flooring product offering makes us less susceptible to holiday shopping seasonal patterns compared to other retailers. Available Information We maintain a website at www.FloorandDecor.com. The information on or available through our website is not, and should not be considered, a part of this Annual Report.
In order to provide the level of customer service that we expect, it is important that we adequately staff our stores with trained employees. As of December 26, 2024, the majority of our stores were staffed at a level that we deem appropriate. • Training . Training associates is also important to ensuring appropriate levels of customer service.
We look at a variety of measures and objectives related to the attraction, development, engagement, safety, and retention of our employees, including: • Store Staffing . In order to provide the level of customer service that we expect, it is important that we adequately staff our stores with trained employees.
We currently source our products from more than 240 vendors worldwide and have long-term relationships with many of them. We often collaborate with our vendors to design products to address emerging customer preferences that we observe in our stores and markets.
We often collaborate with our vendors to design products to address emerging customer preferences that we observe in our stores and markets. We procure the majority of our products directly from manufacturers, which eliminates additional costs from exporters, importers, wholesalers, and distributors.
When a product is not available in the store, our four regional distribution centers and neighboring stores can often quickly ship the product to meet a customer’s needs. Customers also have access to our full catalog of inventory for in-store pickup or delivery through FloorandDecor.com . Unique and Inspiring Shopping Environment.
Our stores carry a large in-stock assortment at job size quantities to differentiate us from our competitors. When a product is not available in the store, our five regional distribution centers and neighboring stores can often quickly ship the product to meet a customer’s needs.
We are mindful of the benefits of associate engagement in all aspects of the employment cycle as they are key to our culture and long-term success. We seek to build a workplace where we can leverage our collective talents, striving to ensure that all associates are treated with dignity and respect. • Safety .
We seek to build a workplace where we can leverage our collective talents, striving to ensure that all associates are treated with dignity and respect. • Safety . Maintaining a safe working environment is very important to us. Our safety and store operations teams work on safety training and initiatives. • Rewards .
We have also invested in technology to help us further penetrate and grow our Pro business. We continue to invest in refreshing and expanding our services to Pros to better facilitate our growing Pro business. 6 Table of Contents Continue to Invest in Design Services.
We continue to invest in people and technology to gain and retain Pro customers due to their frequent high-ticket purchases, loyalty, and propensity to refer other potential customers. We continually refresh and expand our services to Pros to better facilitate our growing Pro business. 6 Table of Contents Continue to Invest in Design Services.
We have a Learning Department, and in 2024, associates engaged in approximately 300,000 hours of training. • Internal Advancement Opportunities . Our growth opportunities are a critical way to attract and retain employees, and we encourage a promote-from-within environment when internal resources permit. In 2024, more than 1,600 employees were promoted to more senior positions. • Culture .
Our growth opportunities are a critical way to attract and retain employees, and we encourage a promote-from-within environment, with more than 1,450 employees promoted in fiscal 2025. • Culture . We are mindful of the benefits of associate engagement as they are key to our culture and long-term success.
We are focused on bypassing importers, exporters, wholesalers, distributors, and other middlemen in our supply chain in order to reduce costs and lead time. Our direct sourcing model and the resulting relationships we have developed with our suppliers are distinct competitive advantages.
Our largest supplier, which is multinational, accounted for 10% of our net sales in fiscal 2025, while no other individual supplier accounted for 10% or more of our net sales. We are focused on bypassing importers, exporters, wholesalers, distributors, and other middlemen in our supply chain in order to reduce costs and lead time.
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Floor & Decor’s online experience allows our customers to explore our product selection and design ideas before and after visiting our stores and offers the convenience of making online purchases for delivery or pick up in-store. We believe our online platform reflects our brand attributes and provides a powerful tool to educate, inspire, and engage our consumers.
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Floor & Decor’s online experience allows our customers to discover our product selection, learn more about the products that suit their project, and purchase products either for delivery or pick up in-store.
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We continue to invest in gaining and retaining Pro customers due to their frequent and high-ticket purchases, loyalty, and propensity to refer other potential customers. We have made important investments in the Pro services regional teams to better recruit and train the Pro services team in each store.
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Our online experience also enables an omnichannel experience by providing the customer information about what they will find in their local store, and, once in the store, offers easily accessible product specifications and inspirational design ideas for products they are considering.
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Our strong focus on the customer experience drives us to remain innovative and locally relevant while maintaining everyday low prices and in-stock merchandise in a one-stop shopping destination.
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As we continue to grow, we believe connected customer will become an increasingly important part of our strategy. Marketing and Advertising We maintain low advertising expenses of approximately 2% to 3% of net sales, while reaching new and repeat customers through a mix of marketing channels and capabilities.
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In addition to highlighting our broad product selection, FloorandDecor.com offers a convenient opportunity for customers to purchase products online and pick them up in our stores or have them delivered. As we continue to grow, we believe connected customer will become an increasingly important part of our strategy.
Added
Our marketing strategy is designed to optimize our omnichannel experience, which integrates physical stores and digital channels. We measure the effectiveness of our marketing spend with a variety of metrics to most effectively drive awareness, customer acquisition, and sales. Sourcing Floor & Decor has a well-developed and geographically diverse supplier base.
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Marketing and Advertising We use a multi-platform approach to increasing Floor & Decor’s brand awareness, while historically maintaining low advertising costs of approximately 2% to 3% of net sales.
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Our direct sourcing model and the resulting relationships we have developed with our suppliers are distinct competitive advantages. The cost savings we achieve by directly sourcing our merchandise enable us to offer our customers everyday low prices.
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We use a blend of digital and traditional advertising media to share the Floor & Decor story with a growing audience based on what we believe will most effectively drive awareness, customer acquisition, and sales. To further enhance our impact, our store managers have input into their respective stores’ marketing spend.
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We rely on the forecasting accuracy of our system to maintain the in-stock, job-lot quantities that our customers rely on. In 2024, we began a multi-year implementation of portions of our enterprise resource planning (ERP) system, which will replace our existing core financial and merchandising systems.
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Sourcing Floor & Decor has a well-developed and geographically diverse supplier base. Our largest supplier, which is multinational, accounted for 11% of our net sales in fiscal 2024, while no other individual supplier accounted for 10% or more of our net sales.
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As of December 25, 2025, our stores were staffed at a level that we deem appropriate. • Training . Training associates is important to ensuring appropriate levels of customer service. We have a Learning Department, and in fiscal 2025, associates engaged in approximately 550,000 hours of training. • Internal Advancement Opportunities .
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In particular, in 2025 and 2026, we anticipate opening additional distribution centers near Seattle and Baltimore. 8 Table of Contents Management Information Systems Technology plays a crucial role in the continued growth and success of our business.
Added
Government Regulation We are subject to extensive and varied federal, state, and local laws and regulations that impact us, our operations, properties, and suppliers, including those relating to employment, the environment, protection of natural resources, import and export, advertising, labeling, public health and safety, product safety, zoning, fire codes, and other operations of our retail stores and distribution facilities.
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Currently none of our associates are represented by a union (for more information, refer to Item 1A, “Risk Factors” of Part I of this Annual Report). We look at a variety of measures and objectives related to the attraction, development, engagement, safety, and retention of our employees, including: • Store Staffing .
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We operate our business in accordance with standards and procedures designed to comply with applicable laws and regulations.
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Maintaining a safe shopping environment is very important to us. Our Safety & Loss Prevention team works closely with our Store Operations team on safety training and initiatives. • Rewards .
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The information on or available through our website is not, and should not be considered, a part of this Annual Report.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

70 edited+21 added−25 removed126 unchanged
Biggest changeOur indebtedness, combined with our lease and other financial obligations and contractual commitments, could adversely affect our business, financial condition, and operating results by: • making it more difficult for us to satisfy our obligations with respect to our indebtedness, including restrictive covenants and borrowing conditions, which may lead to an event of default under the agreements governing our debt; • requiring us to dedicate a substantial portion of our cash flow from operations to payments on our indebtedness, thereby reducing the availability of cash flows to fund current operations and future growth; • exposing us to the risk of increased interest rates and increased debt service obligations as our borrowings under our Credit Facilities are at variable rates; • restricting us from making strategic acquisitions; • requiring us to comply with financial and operational covenants that may restrict us, among other things, from placing liens on our assets, making investments, incurring debt, making payments to our equity or debt holders and engaging in transactions with affiliates; • limiting our ability to borrow additional amounts for working capital, capital expenditures, debt service requirements, execution of our business and growth strategies or other purposes; and • limiting our ability to obtain credit from our suppliers and other financing sources on acceptable terms or at all. 21 Table of Contents Certain of the variable rate indebtedness extended to us uses the Secured Overnight Financing Rate (“SOFR”) as a benchmark for establishing the interest rate.
Biggest changeIn addition, as of December 25, 2025, we had the ability to access $660.5 million of unused borrowings available under the ABL Facility without violating any covenants thereunder. 20 Table of Contents Our indebtedness, combined with our lease and other financial obligations and contractual commitments, could adversely affect our business, financial condition, and operating results by making it more difficult for us to satisfy our obligations with respect to our indebtedness, including restrictive covenants and borrowing conditions, which may lead to an event of default under the agreements governing our debt; requiring us to dedicate a substantial portion of our cash flow from operations to payments on our indebtedness, thereby reducing the availability of cash flows to fund current operations and future growth; exposing us to the risk of increased interest rates and increased debt service obligations as our borrowings under our Credit Facilities are at variable rates; restricting us from making strategic acquisitions; requiring us to comply with financial and operational covenants that may restrict us, among other things, from placing liens on our assets, making investments, incurring debt, making payments to our equity or debt holders and engaging in transactions with affiliates; limiting our ability to borrow additional amounts for working capital, capital expenditures, debt service requirements, execution of our business and growth strategies or other purposes; and limiting our ability to obtain credit from our suppliers and other financing sources on acceptable terms or at all.
As a result of these factors and other factors that may be outside of our control, newly opened stores may not succeed or may not reach profitability at all, or may be slower to reach profitability than we expect.
As a result of these factors and other factors that may be outside of our control, newly opened stores may not succeed, may not reach profitability at all, or may be slower to reach profitability than we expect.
We are subject to a wide range of general and industry-specific laws and regulations imposed by federal, state and local authorities in the countries in which we operate, including those related to customs, foreign operations (such as the FCPA), truth-in-advertising, consumer protection (such as the California Consumer Privacy Act and Telephone Consumer Protection Act), privacy, product safety (such as the Formaldehyde Standards in Composite Wood Products Act), the environment (such as the Lacey Act), import and export controls (such as the Uyghur Forced Labor Prevention Act), intellectual property infringement, immigration, the use, storage, generation, transportation, treatment, emission, release and disposal of certain hazardous materials and wastes, zoning and occupancy matters, and the operation of retail stores and distribution facilities.
We are subject to a wide range of general and industry-specific laws and regulations imposed by federal, state, and local authorities in the countries in which we operate, including those related to customs, foreign operations (such as the FCPA), truth-in-advertising, consumer protection (such as the Telephone Consumer Protection Act), privacy, product safety (such as the Formaldehyde Standards in Composite Wood Products Act), the environment (such as the Lacey Act), import and export controls (such as the Uyghur Forced Labor Prevention Act), intellectual property infringement, immigration, the use, storage, generation, transportation, treatment, emission, release and disposal of certain hazardous materials and wastes, zoning and occupancy matters, and the operation of retail stores and distribution facilities.
Our operating results may be adversely affected by increases in wholesale prices of products, materials and transportation costs beyond our control, including increases in costs due to inflation. Our operating results may be affected by the wholesale prices of hard surface flooring products, setting and installation materials, and the related accessories that we sell.
Our operating results may be adversely affected by increases in wholesale prices of products, materials and transportation costs beyond our control, including increases in costs due to inflation. Our operating results may be affected by the wholesale prices of hard surface flooring products, installation materials, and the related accessories that we sell.
These provisions, among other things: • authorize the Board to issue “blank check” preferred stock without stockholder approval, which, if issued, would increase the number of outstanding shares of our capital stock, make it more difficult for someone to acquire us, and potentially adversely affect the voting power of the holders of our other classes of voting stock; • establish the sole power of a majority of our Board to fix the number of directors; • require that certain advance notice procedures be followed for our stockholders to submit nominations of candidates for election to our Board and to bring other proposals before a meeting of the stockholders; • provide our Board with the ability to amend our bylaws without stockholder approval; • provide that any vacancy on the Board, whether such vacancy occurs as a result of an increase in the number of directors or otherwise, may only be filled by a majority of the Board members still in office; • provide that only the Board or the chairperson of the Board may call special meetings of stockholders; • prohibit stockholder action by written consent, thus requiring all stockholder actions to be taken at a meeting of stockholders; and • require that, to the fullest extent permitted by law, certain proceedings against or involving us or our directors, officers, or associates be brought exclusively in the Court of Chancery in the State of Delaware.
These provisions, among other things authorize the Board to issue “blank check” preferred stock without stockholder approval, which, if issued, would increase the number of outstanding shares of our capital stock, make it more difficult for someone to acquire us, and potentially adversely affect the voting power of the holders of our other classes of voting stock; establish the sole power of a majority of our Board to fix the number of directors; require that certain advance notice procedures be followed for our stockholders to submit nominations of candidates for election to our Board and to bring other proposals before a meeting of the stockholders; provide our Board with the ability to amend our bylaws without stockholder approval; provide that any vacancy on the Board, whether such vacancy occurs as a result of an increase in the number of directors or otherwise, may only be filled by a majority of the Board members still in office; prohibit stockholder action by written consent, thus requiring all stockholder actions to be taken at a meeting of stockholders; and require that, to the fullest extent permitted by law, certain proceedings against or involving us or our directors, officers, or associates be brought exclusively in the Court of Chancery in the State of Delaware.
We currently lease the majority of our real estate, including most of our store locations and distribution centers and our store support center. Our growth strategy largely depends on our ability to identify and open future store locations, which can be difficult because our warehouse-format stores in major metropolitan markets generally require at least 60,000 square feet of floor space.
We currently lease the majority of our real estate, including most of our store locations and distribution centers and our store support center. Our growth strategy largely depends on our ability to identify and open future store locations, which can be difficult because our warehouse-format stores in major metropolitan markets generally require at least 50,000 square feet of floor space.
Any such intellectual property claim, regardless of whether such claim has merit, could subject us to material and costly disputes or litigation and impose a significant strain on our financial resources and management personnel. We may, from time to time, consider or engage in strategic transactions.
Any such intellectual property claim, regardless of whether such claim has merit, could subject us to material and costly disputes or litigation and impose a significant strain on our financial resources and management personnel. We may consider or engage in strategic transactions.
Any determination to pay dividends in the future will be at the discretion of our Board of Directors (the “Board”) and will depend upon our operating results, financial condition, contractual restrictions, restrictive covenants under our Credit Facilities, restrictions imposed by applicable law and other factors our Board deems relevant.
Any determination to pay dividends in the future will be at the discretion of our Board and will depend upon our operating results, financial condition, contractual restrictions, restrictive covenants under our Credit Facilities, restrictions imposed by applicable law and other factors our Board deems relevant.
Further, Delaware law imposes conditions on the voting of “control shares” and on certain business combination transactions with “interested stockholders.” 22 Table of Contents These provisions in our organizational documents and Delaware law could delay or prevent hostile takeovers and changes in control or changes in our management.
Further, Delaware law imposes conditions on the voting of “control shares” and on certain business combination transactions with “interested stockholders.” 21 Table of Contents These provisions in our organizational documents and Delaware law could delay or prevent hostile takeovers and changes in control or changes in our management.
We are engaged in various legal actions, claims and proceedings, including claims related to breach of contract, product liabilities, intellectual property matters and employment-related matters resulting from our business activities. We also have been and may in the future be the target of securities-related litigation.
We are engaged in various legal actions, claims and proceedings, including claims related to breach of contract, personal injury, product liabilities, intellectual property matters, and employment-related matters resulting from our business activities. We also have been and may in the future be the target of securities-related litigation.
We procure the majority of our products from suppliers located outside of the United States, and as a result, we are subject to risks associated with obtaining products from abroad that could adversely affect our business, financial condition, and results of operations. We procure the majority of our products from suppliers located outside of the United States.
We procure the majority of our products from suppliers located outside of the United States, and as a result, we are subject to risks associated with obtaining products from abroad that have previously and could adversely affect our business, financial condition, and results of operations. We procure the majority of our products from suppliers located outside of the United States.
If our suppliers cannot deliver sufficient products, and we cannot find replacement suppliers, our net sales and operating results may be adversely affected. 16 Table of Contents The effects of weather conditions, natural disasters or other unexpected events, including public health crises, may disrupt our operations and have a negative impact on our business.
If our suppliers cannot deliver sufficient products, and we cannot find replacement suppliers, our net sales and operating results may be adversely affected. The effects of weather conditions, natural disasters, or other unexpected events, including public health crises, may disrupt our operations and have a negative impact on our business.
Customers are increasingly able to quickly comparison shop and determine real-time product availability and price using digital tools. We will be at a competitive disadvantage if, over time, our competitors are more effective than us in their utilization and integration of rapidly evolving technologies.
Customers are increasingly able to quickly comparison shop and determine real-time product availability and price using digital tools. We will be at a competitive disadvantage if, over time, our competitors are more effective than us in their utilization and integration of rapidly evolving technologies, including artificial intelligence.
Among other things, we compete on the basis of breadth of product assortment, everyday low prices, locations of stores, in-store availability of job-lot quantities, the quality of our products, customer service and innovation. We face growing competition from omni-channel retailers who may have similar product offerings.
Among other things, we compete on the basis of breadth of product assortment, everyday low prices, locations of stores, in-store availability of job-lot quantities, the quality of our products, customer service, and innovation. We face growing competition from omnichannel retailers who may have similar product offerings.
Developments in tax policy or trade relations could also have a material adverse effect on our business, results of operations, and liquidity. We are subject to payments-related risks that could increase our operating costs, expose us to fraud, subject us to potential liability and potentially disrupt our business.
Developments in tax policy or trade relations could also have a material adverse effect on our business, results of operations, and liquidity. 19 Table of Contents We are subject to payments-related risks that could increase our operating costs, expose us to fraud, subject us to potential liability and potentially disrupt our business.
Although we conduct due diligence prior to engaging our suppliers, require our suppliers to certify compliance with applicable laws and regulations, and have in place ongoing quality assurance and compliance programs, we cannot guarantee that our suppliers will comply with applicable laws and regulations or operate in a legal, ethical and responsible manner.
Although we conduct due diligence prior to engaging our suppliers, require our suppliers to certify compliance with applicable laws and regulations, and have in place ongoing quality assurance and compliance programs, we cannot guarantee that our suppliers will comply with applicable laws and regulations or operate in a legal, ethical and responsible manner, or otherwise meet our quality assurance requirements.
In addition, the failure of our suppliers to adhere to the quality standards that we set for our products could lead to government investigations, litigation, write-offs and recalls, which could damage our reputation and our brand, increase our costs, and otherwise adversely affect our business.
In addition, the failure of our suppliers to adhere to the quality standards that we set for our products has led to and could lead to mitigation costs, government investigations, litigation, write-offs and recalls, which could damage our reputation and our brand, increase our costs, and otherwise adversely affect our business.
While we have developed multiple supply sources in a variety of countries and believe our vendor compliance program reflects our commitment to a supply chain free of forced labor, we could still be adversely affected by increases in our costs, negative publicity related to the industry, or other adverse consequences to our business.
We have developed multiple supply sources in a variety of countries and believe our vendor compliance program reflects our commitment to a supply chain free of forced labor. Despite these efforts, we could still be adversely affected by increases in our costs, negative publicity related to the industry, or other adverse consequences to our business.
From time to time, we consider strategic transactions, including mergers, acquisitions, investments, joint ventures, alliances, and other growth and market expansion strategies, with the expectation that these transactions will result in increases in sales, cost savings, synergies and various other benefits. Assessing the viability and realizing the benefits of these transactions is subject to significant uncertainty.
We may consider strategic transactions, including mergers, acquisitions, investments, joint ventures, alliances, and other growth and market expansion strategies, with the expectation that these transactions will result in increases in sales, cost savings, synergies, and/or various other benefits. Assessing the viability and realizing the benefits of these transactions is subject to significant uncertainty.
This decrease in comparable store sales has had a negative impact on our net sales for the fiscal year ended December 26, 2024, and while future net sales growth will depend substantially on our plans for new store openings, our comparable store sales growth is a significant driver of our net sales, profitability, cash flow, and overall business results.
This decrease in comparable store sales has had a negative impact on our net sales for the fiscal year ended December 25, 2025, and while future net sales growth will depend substantially on our plans for new store openings, our comparable store sales growth is a significant driver of our net sales, profitability, cash flow, and overall business results.
Further, our ability to pay interest on and principal of our debt obligations under our ABL Facility and our $200.3 million senior secured term loan facility (as amended to date, the “Term Loan Facility” and together with the ABL Facility, our “Credit Facilities”) will primarily depend upon our future operating performance.
Further, our ability to pay interest on and principal of our debt obligations under our ABL Facility and our $198.2 million senior secured term loan facility (as amended to date, the “Term Loan Facility” and together with the ABL Facility, our “Credit Facilities”) will primarily depend upon our future operating performance.
These risks include the imposition of new or different duties (including antidumping and countervailing duties), tariffs, taxes and/or other charges on exports or imports, including as a result of errors in the classification of products upon entry or changes in the interpretation or application of rates or regulations relating to the import or export of our products; political unrest, acts of war, terrorism and economic instability resulting in the disruption of trade from foreign countries where our products originate; disruption due to public health crises; currency exchange fluctuations; the imposition of new or more stringent laws and regulations, including those relating to environmental, health and safety matters and climate change issues, labor conditions, quality and safety standards, trade restrictions, and restrictions on funds transfers; the risk that one or more of our suppliers will not adhere to applicable legal requirements, including fair labor standards, the prohibition on child labor, environmental, product safety or manufacturing safety standards, anti-bribery and anti-kickback laws such as the Foreign Corrupt Practices Act (the “FCPA”), and sourcing laws such as the Lacey Act; or disruptions or delays in production, shipments, delivery or processing through ports of entry, including those resulting from strikes, lockouts, work-stoppages or slowdowns, or other forms of labor unrest. 15 Table of Contents Additionally, approximately 18% of the products we sold in fiscal 2024 were produced in China.
These risks include the imposition of new or different duties (including antidumping and countervailing duties), tariffs, taxes, and/or other charges on exports or imports, including as a result of errors in the classification of products upon entry or changes in the interpretation or application of rates or regulations relating to the import or export of our products; political unrest, acts of war, terrorism and economic instability resulting in the disruption of trade from foreign countries where our products originate; disruption due to public health crises; currency exchange fluctuations; the imposition of new or more stringent laws and regulations, including those relating to environmental, health and safety matters, climate change issues, labor conditions, quality and safety standards, trade restrictions, and restrictions on funds transfers; the risk that one or more of our suppliers will not adhere to applicable legal requirements, including fair labor standards, the prohibition on child labor, environmental, product safety or manufacturing safety standards, anti-bribery and anti-kickback laws such as the Foreign Corrupt Practices Act (the “FCPA”), and sourcing laws such as the Lacey Act; or disruptions or delays in production, shipments, delivery or processing through ports of entry, including those resulting from strikes, lockouts, work-stoppages or slowdowns, or other forms of labor unrest.
We currently maintain a high level of inventory in order to have a broad assortment of products across a wide variety of hard surface flooring categories in job-lot quantities, with inventory per warehouse-format store consisting of on average approximately 4,400 SKUs and approximately $2.7 million of inventory at cost as of December 26, 2024.
We currently maintain a high level of inventory in order to have a broad assortment of products across a wide variety of hard surface flooring categories in job-lot quantities, with inventory per warehouse-format store consisting of on average approximately 4,200 SKUs and approximately $2.7 million of inventory at cost as of December 25, 2025.
A material component of the cost of our products includes transportation costs to move the products from the manufacturer to our stores, and, as we have experienced, these costs could increase due to the factors listed above and in the other risk factors, which can have a material impact on inventory and cost of sales.
A material component of the cost of our products includes transportation costs to move the products from the manufacturer to our stores, and, as we have experienced, these costs could increase due to the factors listed above and in the other risks described in this report, which can have a material impact on inventory and cost of sales.
The increased use of associate-owned devices for communications as well as work-from-home arrangements may exacerbate cybersecurity risk, including presenting additional operational risks to our information technology systems and increased risks of cyberattacks. The cybersecurity threat landscape is vast, and techniques used to obtain unauthorized access, disable, degrade service or sabotage information technology systems evolve frequently.
The increased use of associate-owned devices for communications as well as work-from-home arrangements may exacerbate cybersecurity risk, including presenting additional operational risks to our information technology systems and increased risks of cyberattacks. 18 Table of Contents The cybersecurity threat landscape is vast, and techniques used to obtain unauthorized access, disable, degrade service or sabotage information technology systems evolve frequently, including as a result of artificial intelligence.
If any of our products proves to be defective or otherwise in violation of applicable law, we may be required to recall such products and be subject to legal action. In connection with the installation or delivery of our products, customers may engage third parties associated with us to enter their homes. In addition, we are providing in-home design services.
If any of our products proves to be defective or otherwise in violation of applicable law, we may be required to recall such products and be subject to legal action. In connection with the installation or delivery of our products, customers may engage third parties associated with us to enter their homes.
Our comparable store sales decreased 7.1% for the fiscal year ended December 26, 2024 and by 7.1% for the fiscal year ended December 28, 2023, primarily due to decreased consumer demand for the products we sell.
Our comparable store sales decreased 1.8% for the fiscal year ended December 25, 2025 and by 7.1% for the fiscal year ended December 26, 2024, primarily due to decreased consumer demand for the products we sell.
We also carried an additional $507.9 million of inventory outside our stores, primarily at our distribution centers and in-transit to our distribution centers, as of December 26, 2024. The investment associated with this high level of inventory is substantial, and as we continue to broaden our supplier base, we may increase the number of SKUs and investments associated with inventory.
We also carried an additional $486.3 million of inventory outside our stores, primarily at our distribution centers and in-transit to our distribution centers, as of December 25, 2025. The investment associated with this high level of inventory is substantial, and as we continue to broaden our supplier base, we may increase the number of SKUs and investments associated with inventory.
If we fail to comply with these rules or requirements, or if our data security systems or payment card information of our customers are breached or compromised, there is the potential that parties could seek damages from us; we may be liable for card issuing banks’ costs, subject to fines and higher transaction fees, and lose our ability to accept credit cards and debit card payments from our customers, process electronic funds transfers, or facilitate other types of online payments; we could lose the confidence of customers; and our business, financial condition, and operating results could be adversely affected. 20 Table of Contents Our intellectual property rights are valuable, and any failure to protect them could reduce the value of our products and brand and harm our business.
If we fail to comply with these rules or requirements, or if our data security systems or payment card information of our customers are breached or compromised, there is the potential that parties could seek damages from us; we may be liable for card issuing banks’ costs, subject to fines and higher transaction fees, and lose our ability to accept credit cards and debit card payments from our customers, process electronic funds transfers, or facilitate other types of online payments; we could lose the confidence of customers; and our business, financial condition, and operating results could be adversely affected.
Adverse incidents related to these matters could negatively impact the value of our brand, operating costs, and relationships with investors, all of which could adversely affect our business and operating results.
We risk damage to our brand and reputation for our actions or inactions. Adverse incidents related to these matters could negatively impact the value of our brand, operating costs, and relationships with investors, all of which could adversely affect our business and operating results.
Our future operating results and ability to grow will depend on various other factors, including our ability to successfully select new markets and store locations; drive brand awareness, particularly in new markets; attract, train and retain highly qualified managers and staff; manage store opening costs, including rising construction costs and costs due to delays in obtaining necessary permits and completing construction; manage the impact of cannibalization by new stores on nearby existing store sales; and manage and expand our infrastructure to accommodate growth.
Our future operating results and ability to grow will depend on various other factors, including our ability to successfully select new markets and store locations; drive brand awareness, particularly in new markets; attract, train and retain highly qualified managers and staff; manage store opening costs, including rising construction costs and costs due to delays in obtaining necessary permits and completing construction; manage the impact of cannibalization by new stores on nearby existing store sales; and manage and expand our infrastructure to accommodate growth. 10 Table of Contents In addition, stores opened more recently have had, and many continue to have, higher construction, occupancy, and operating costs than stores opened in the past, and such stores may have lower profitability than stores opened in the past.
We depend on a number of suppliers, and any failure by any of them to supply us with quality products on attractive terms and prices may adversely affect our business, financial condition, and operating results. We depend on our suppliers to deliver quality products to us on a timely basis at attractive prices.
These and other factors beyond our control could adversely affect our business, financial condition, and operating results. We depend on a number of suppliers, and any failure by any of them to supply us with quality products on attractive terms and prices may adversely affect our business, financial condition, and operating results.
We rely on our information systems to process transactions, summarize our results of operations and manage our business. In particular, our website is an important part of our integrated connected customer strategy, and customers use our website as an information source on the range of products available to them and as a way to order our products.
In particular, our website is an important part of our integrated connected customer strategy, and customers use our website as an information source on the range of products available to them and as a way to order our products.
If we are unable to acquire desired merchandise in sufficient quantities on terms acceptable to us, or if we experience a change in business relationship with any of our major suppliers, it could impair our relationship with our customers, impair our ability to attract new customers, reduce our competitiveness, and adversely affect our business, financial condition, and operating results.
If we are unable to acquire desired merchandise in sufficient quantities on terms acceptable to us, or if we experience a change in business relationship with any of our major suppliers, it could impair our relationship with our customers, impair our ability to attract new customers, reduce our competitiveness, and adversely affect our business, financial condition, and operating results. 15 Table of Contents Additionally, we provide certain of our suppliers access to supply chain financing arrangements with financial institutions with whom we have relationships.
Further, any security breach incident could expose us to risks of data loss, regulatory and law enforcement investigations, litigation and liability and could seriously disrupt our operations, and any resulting negative publicity could significantly harm our reputation and relationships with our customers, associates, or suppliers, all of which could adversely affect our business, financial condition, and operating results. 18 Table of Contents A disruption in our information systems, including our website, could adversely affect our business or operating results and lead to reduced net sales and reputational damage.
Further, any security breach incident could expose us to risks of data loss, regulatory and law enforcement investigations, litigation and liability and could seriously disrupt our operations, and any resulting negative publicity could significantly harm our reputation and relationships with our customers, associates, or suppliers, all of which could adversely affect our business, financial condition, and operating results.
We may not be able to adjust the prices of our products, especially in the short-term, to recover these cost increases, and a continual rise in such costs could adversely affect consumer spending and demand for our products, which could adversely affect our business, financial condition, and operating results. 14 Table of Contents Our success depends substantially upon the continued retention of our key personnel, including our executive officers.
We may not be able to adjust the prices of our products, especially in the short-term, to recover these cost increases, and a continual rise in such costs could adversely affect consumer spending and demand for our products, which could adversely affect our business, financial condition, and operating results.
See the information disclosed under “Litigation” in Note 9, “Commitments and Contingencies” to the notes to our consolidated financial statements included in this Annual Report for further detail on legal proceedings. We are subject to risks related to corporate social responsibility. Regulators, customers, investors, associates, and other stakeholders are increasingly focusing on environmental, social, and governance matters and related disclosures.
See the information disclosed under “Litigation” in Note 9, “Commitments and Contingencies” of the notes to our consolidated financial statements included in this Annual Report for further detail on legal proceedings. We are subject to risks related to corporate social responsibility.
The uncertain nature, magnitude, and duration of hostilities stemming from such conflicts, including the potential effects of sanctions and countersanctions, and retaliatory cyberattacks on the world economy and markets, have contributed to increased market volatility and uncertainty, which could have an adverse impact on macroeconomic factors that affect our business and operations. 13 Table of Contents Our operating results may be adversely affected if we do not successfully manage our inventory.
The uncertain nature, magnitude, and duration of hostilities stemming from such conflicts, including the potential effects of sanctions and countersanctions, and retaliatory cyberattacks on the world economy and markets, have contributed to increased market volatility and uncertainty, which could have an adverse impact on macroeconomic factors that affect our business and operations.
Any or all of these factors and conditions could adversely affect our growth and profitability. 11 Table of Contents Our business largely depends on a strong brand image and awareness, and if we are unable to maintain and enhance our brand image and awareness, particularly in new markets where we have limited brand recognition, we may be unable to increase or maintain our level of sales.
Our business largely depends on a strong brand image and awareness, and if we are unable to maintain and enhance our brand image and awareness, particularly in new markets where we have limited brand recognition, we may be unable to increase or maintain our level of sales.
In particular, the ultimate extent of the impact of any epidemic, pandemic or other public health crisis on our business, financial condition, and results of operations will depend on future developments that are highly uncertain and cannot be predicted, including new information that may emerge concerning the duration and severity of such public health crisis, actions taken to contain or prevent its further spread, and the pace of global economic recovery following containment of the spread.
In particular, the ultimate extent of the impact of any epidemic, pandemic, or other public health crisis on our business, financial condition, and results of operations will depend on future developments that are highly uncertain and cannot be predicted, including new information that may emerge concerning the duration and severity of such public health crisis, actions taken to contain or prevent its further spread, and the pace of global economic recovery following containment of the spread. 16 Table of Contents Our business exposes us to personal injury, product liability and warranty claims and related governmental investigations, which could result in negative publicity, harm our brand and adversely affect our business, financial condition, and operating results.
If such programs are modified or cancelled, our suppliers may not be able to obtain alternate financing at all or on acceptable terms. If our suppliers experience difficulty obtaining financing, it may result in delays or non-delivery of shipments of our products or require us to pay our suppliers more quickly, which would have a negative impact on our liquidity.
If our suppliers experience difficulty obtaining financing, it may result in delays or non-delivery of shipments of our products or require us to pay our suppliers more quickly, which would have a negative impact on our liquidity.
Further, as we expand into new and unfamiliar markets, we may experience different competitive conditions than in the past. 12 Table of Contents Some of our competitors are organizations that are larger, better capitalized, have existed longer, have product offerings that extend beyond hard surface flooring and related accessories, and have a more established market presence with substantially greater financial, marketing, delivery, customer loyalty, personnel and other resources than we have.
Some of our competitors are organizations that are larger, better capitalized, have existed longer, have product offerings that extend beyond hard surface flooring and related accessories, and have a more established market presence with substantially greater financial, marketing, delivery, customer loyalty, personnel, and other resources than we have.
We cannot ensure that new store locations will be available to us, or that they will be available on terms acceptable to us. If additional retail store locations are unavailable on acceptable terms, we may not be able to carry out a significant part of our growth strategy or our new stores’ profitability may be lower.
If additional retail store locations are unavailable on acceptable terms, we may not be able to carry out a significant part of our growth strategy or our new stores’ profitability may be lower. Certain of our new store openings are expected to be smaller stores and certain stores will be in smaller markets.
Third parties have raised and may raise future claims against us alleging infringement or violation of the intellectual property of such third-party. Some third-party intellectual property rights may be extremely broad, and it may not be possible for us to conduct our operations in such a way as to avoid violating any such intellectual property rights.
Some third-party intellectual property rights may be extremely broad, and it may not be possible for us to conduct our operations in such a way as to avoid violating any such intellectual property rights.
We may continue to have negative comparable store sales or future comparable store growth lower than we expect, which has had and may continue to have a negative impact on our net sales, business, financial condition, and operating results.
Furthermore, we may incur costs associated with the closure of underperforming stores, and such store closures may adversely impact our revenues. We may continue to have negative comparable store sales or future comparable store growth lower than we expect, which has had and may continue to have a negative impact on our net sales, business, financial condition, and operating results.
In addition, various federal and state laws govern our relationship with, and other matters pertaining to, our associates, including wage and hour laws, laws governing independent contractor classifications, requirements to provide meal and rest periods or other benefits, paid and unpaid leave mandates, requirements regarding working conditions and accommodations to certain associates, citizenship or work authorization and related requirements, insurance and workers’ compensation rules and anti-discrimination laws. 17 Table of Contents In recent years, we and other parties in the flooring industry have been or currently are parties to litigation involving claims that allege violations of these laws, including claims related to product safety and patent claims.
In addition, various federal and state laws govern our relationship with, and other matters pertaining to, our associates, including wage and hour laws, laws governing independent contractor classifications, requirements to provide meal and rest periods or other benefits, paid and unpaid leave mandates, requirements regarding working conditions and accommodations to certain associates, citizenship or work authorization and related requirements, insurance and workers’ compensation rules, and anti-discrimination laws.
While we believe we will continue to use SOFR, other factors may impact SOFR, including factors causing SOFR to cease to exist, new methods of calculating SOFR to be established, or the use of an alternative reference rate(s).
The variable rate indebtedness extended to us uses the Secured Overnight Financing Rate (“SOFR”) as a benchmark for establishing the interest rate. While we believe we will continue to use SOFR, other factors may impact SOFR, including factors causing SOFR to cease to exist, new methods of calculating SOFR to be established, or the use of an alternative reference rate(s).
If our efforts to protect the privacy and security of information related to our customers, us, our associates, our suppliers and other third parties are not successful, we could become subject to litigation, investigations, liability and negative publicity that could significantly harm our reputation and relationships with our customers and adversely affect our business, financial condition, and operating results.
Any changes to these laws or regulations, increased or expanded enforcement of these laws or regulations, or any new laws or regulations that are passed or go into effect may make it more difficult for us to operate our business and in turn adversely affect our operating results. 17 Table of Contents If our efforts to protect the privacy and security of information related to our customers, us, our associates, our suppliers and other third parties are not successful, we could become subject to litigation, investigations, liability and negative publicity that could significantly harm our reputation and relationships with our customers and adversely affect our business, financial condition, and operating results.
Furthermore, our brand image could be jeopardized if we fail to maintain high standards for merchandise quality, if we fail to comply with local laws and regulations, or if we experience negative publicity or other negative events that affect our image and reputation.
Failure to successfully market, maintain and grow our brand image and awareness in new and existing markets could harm our business, results of operations, and financial condition. 11 Table of Contents Furthermore, our brand image could be jeopardized if we fail to maintain high standards for merchandise quality, if we fail to comply with local laws and regulations, or if we experience negative publicity or other negative events that affect our image and reputation.
Due to the likelihood that we will continue to incur such costs in the future, we generally include an allowance for such costs in our projections. However, the costs that we actually incur may be substantially higher than our estimates and may adversely affect our operating results.
Due to the likelihood that we will continue to incur such costs in the future, we generally include an allowance for such costs in our projections.
While such detentions and inquiries have not had a material impact on our business as of December 26, 2024, any detentions, withhold release orders, inquiries, or other policy developments could result in shortages, delays, and/or price increases that could disrupt our own supply chain, adversely affect our relationships with our suppliers, or cause our suppliers to fail to perform their obligations.
While we do not believe that our suppliers source materials from Xinjiang for the products they sell to us, any detentions, withhold release orders, inquiries, or other policy developments could result in shortages, delays, and/or price increases that could disrupt our own supply chain, adversely affect our relationships with our suppliers, or cause our suppliers to fail to perform their obligations.
We plan to continue opening new stores for the next several years. This growth strategy and the investment associated with the development of each new store may cause our operating results to fluctuate and be unpredictable or decrease our profits.
This growth strategy and the investment associated with the development of each new store may cause our operating results to fluctuate and be unpredictable or decrease our profits. We cannot ensure that new store locations will be available to us, or that they will be available on terms acceptable to us.
The current domestic and international political environment, including existing and potential changes to U.S. policies related to global trade and tariffs, have resulted in uncertainty surrounding the future state of the global economy.
The current domestic and international political environment, including existing and potential changes in global trade and tariffs, has resulted in uncertainty surrounding the future state of the global economy and related impacts to our supply chain. In 2025, the U.S. imposed significant additional tariffs on products from most countries where we source products.
We also intend to continue to purchase the real property for new locations, and such strategy may not be successful.
We also intend to continue to purchase the real property for certain new locations, and such strategy may not be successful. Any or all of these factors and conditions could adversely affect our growth and profitability.
Any disruption in our distribution capabilities, our supply chain, or our related planning and control processes may adversely affect our business, financial condition, and operating results. Our success is highly dependent on our planning and distribution infrastructure, which includes the ordering, transportation, and distribution of products to our stores and the ability of suppliers to meet distribution requirements.
Our success is highly dependent on our planning and distribution infrastructure, which includes the ordering, transportation, and distribution of products to our stores and the ability of suppliers to meet distribution requirements.
Certain of our new store openings are expected to be smaller stores in smaller markets. We have limited experience executing this strategy, and we cannot guarantee that we will be successful in this strategy.
We have limited experience executing this strategy, and we cannot guarantee that we will be successful in this strategy.
If this trend continues, it is likely that overall net sales growth would be adversely affected, which could have a negative impact on our business, financial condition, and operating results. 19 Table of Contents We will require significant capital to fund our expanding business and service our existing indebtedness, and such capital may not be available to us on satisfactory terms or at all.
If this trend continues, it is likely that overall net sales growth would be adversely affected, which could have a negative impact on our business, financial condition, and operating results.
If we fail to successfully manage the challenges that our planned new store growth poses or encounter unexpected difficulties or higher costs during our expansion, our operating results and future growth opportunities could be adversely affected. We have 251 warehouse-format stores and five small-format standalone design studios located throughout the United States as of December 26, 2024.
If we fail to successfully manage our new store growth or encounter higher-than-expected costs, our expansion plans and future profitability could suffer. We have 270 warehouse-format stores and five small-format standalone design studios located throughout the United States as of December 25, 2025. We plan to continue opening new stores for the next several years.
We source our products from over 240 domestic and international suppliers. Although we purchase from a diverse supplier base, purchases from our largest supplier, which has operations in China, accounted for approximately 11% of our net sales in fiscal 2024. No other singular vendor supplied products representing 10% or more of net sales in fiscal 2024.
We depend on our suppliers to deliver quality products to us on a timely basis at attractive prices. We source our products from over 240 domestic and international suppliers. Although we purchase from a diverse supplier base, purchases from our largest supplier accounted for approximately 10% of our net sales in fiscal 2025.
These payment options subject us to many compliance requirements, including, but not limited to, compliance with the Payment Card Industry Data Security Standards, which represents a common set of industry tools and measurements to help ensure the safe handling of sensitive information, and compliance with contracts with our third-party processors.
We accept payments using a variety of methods, including credit cards, debit cards, gift cards, cash, and physical bank checks. These payment options subject us to many compliance requirements, including, but not limited to, compliance with the Payment Card Industry Data Security Standards and compliance with contracts with our third-party processors.
Additionally, we provide certain of our suppliers access to supply chain financing arrangements with financial institutions with whom we have relationships. The terms of such supply chain financing arrangements could be modified or canceled by such financial institutions at any time.
The terms of such supply chain financing arrangements could be modified or canceled by such financial institutions at any time. If such programs are modified or cancelled, our suppliers may not be able to obtain alternate financing at all or on acceptable terms.
We face risks related to our indebtedness. As of December 26, 2024, the principal amount of our total indebtedness was $200.3 million related to our indebtedness outstanding under the Term Loan Facility. In addition, as of December 26, 2024, we had the ability to access $718.0 million of unused borrowings available under the ABL Facility without violating any covenants thereunder.
We face risks related to our indebtedness. As of December 25, 2025, the principal amount of our total indebtedness was $198.2 million related to our indebtedness outstanding under the Term Loan Facility.
We may be involved in disputes from time to time relating to our intellectual property and the intellectual property of third parties. We are and may continue to become parties to disputes from time to time over rights and obligations concerning intellectual property, and we may not prevail in these disputes.
In addition, we have been and may in the future become parties to disputes over rights and obligations concerning intellectual property, and we may not prevail in these disputes. Third parties have raised and may raise future claims against us alleging infringement or violation of the intellectual property of such third-party.
In that case, the trading price of our common stock could decline, and you may lose all or part of your investment. Risks Related to Our Business and Industry Declines in certain economic conditions, which impact consumer discretionary spending, could adversely affect our business, financial condition, and results of operations.
In that case, the trading price of our common stock could decline, and you may lose all or part of your investment. Risks Related to Our Business and Industry Persistent macroeconomic headwinds, including high interest rates and weak home sales, may continue to depress demand for our products.
Changing rules, regulations, and stakeholder expectations have resulted in, and are likely to continue to result in, additional obligations, increased general and administrative expenses, increased management time and attention spent complying with or meeting such regulations and expectations, and heightened risks of litigation and enforcement actions. We risk damage to our brand and reputation for our actions or inactions.
Certain regulators, customers, investors, associates, and other stakeholders continue to focus on environmental, social, and governance matters and related disclosures. Changing rules, regulations, and stakeholder expectations have resulted in, and may result in, additional obligations, increased general and administrative expenses, and increased management time and attention spent complying with or meeting such regulations and expectations.
In particular, in recent years, tensions between mainland China and Taiwan have further escalated, with China accelerating the development of military capabilities in order to “reunite Taiwan by force.” In case of a military conflict between China and Taiwan, our ability to import products from China could be limited.
In case of a military conflict between China and Taiwan, our ability to import products from Asia could be limited. Similarly, the ongoing war between Russia and Ukraine could impact our ability to import products and result in further increases in energy costs.
Further, we may have difficulty identifying, attracting and integrating new executives to replace any losses of our other existing or future executive officers, all of which could adversely affect our business, financial condition, and operating results. Our success depends upon our ability to attract, hire, train, and retain highly qualified managers and staff.
Failure to successfully execute these transitions or maintain alignment and motivation among our leadership team could materially and adversely affect our business, financial condition, and operating results. 14 Table of Contents Our success depends upon our ability to attract, hire, train, and retain highly qualified managers and staff.
In addition, stores opened more recently have had, and many continue to have, higher construction, occupancy, and operating costs than stores opened in the past, and such stores may have lower profitability than stores opened in the past. Furthermore, laws or regulations may make opening new stores more difficult or cause unexpected delays.
Furthermore, laws or regulations may make opening new stores more difficult or cause unexpected delays. As we continue to open new stores, the ultimate cost of future store openings could continue to rise significantly due to delays in obtaining necessary construction and occupancy permits, construction-related costs, or other reasons.
All of these factors may harm us and adversely affect our net sales, market share, and operating results. Rising geopolitical tensions and U.S. policies related to global trade and tariffs, including with respect to antidumping and countervailing duties, could adversely affect our business, financial condition, and results of operations.
All of these factors may harm us and adversely affect our net sales, market share, and operating results. 12 Table of Contents Adverse changes in global trade policies, tariffs, or import enforcement actions could increase our costs or disrupt our supply chain.
For example, Trevor Lang, who initially joined the Company in 2011 and served as our President since 2022, has announced his retirement effective March 1, 2025. As we announced in January 2025, we have appointed a new President, Bradley Paulsen, who will join the Company in March 2025.
The loss of the services of one or more of these individuals, or any failure to successfully manage leadership transitions, could have a material adverse effect on our business, financial condition, and operating results. Trevor Lang, who initially joined the Company in 2011 and served as our President since 2022, retired effective March 1, 2025.
Removed
Consumer discretionary spending affects our sales and is impacted by factors outside of our control, including general economic and political conditions, interest rates, the residential housing market, unemployment rates, inflation, disposable income levels, consumer confidence, recession fears, energy costs, consumer credit availability and terms, consumer debt levels, salaries and wage rates, and geopolitical events and uncertainty.
Added
Our sales are highly sensitive to consumer discretionary spending, which is influenced by factors such as overall economic conditions, interest rates, housing market activity, inflation, employment levels, and consumer confidence. In the past few years, we have faced a challenging environment as mortgage interest rates remain high and existing home sales remain low, which together have reduced home remodeling activity.
Removed
Declines in the level of consumer confidence and spending and high interest rates have adversely affected, and could continue to adversely affect, consumer spending habits and consumer discretionary spending, which have resulted in, and may continue to result in, reduced demand for our products.
Added
Many homeowners are staying in their homes rather than moving or undertaking renovations due to factors including high financing costs and home affordability concerns. These conditions have directly contributed to softer demand for hard surface flooring. We have seen pressure on customer traffic and average ticket sizes, resulting in negative comparable store sales and weaker performance from new stores.
Removed
The hard surface flooring industry is highly dependent on existing home sales because homeowners often replace flooring before selling a home or shortly after purchasing a home and, to a lesser extent, on new home construction.
Added
If interest rates remain elevated or climb further, if housing turnover stays depressed, or if broader economic growth slows, consumers may continue deferring flooring purchases. High inflation over the past two years has also eroded discretionary income and savings, making budget-conscious consumers more hesitant to undertake big ticket projects.
Removed
The increase in interest rates in 2022 and 2023 and persistently higher interest rates in 2024 has contributed to several years of negative existing home sales, with such sales near record lows in 2024. We believe such inflationary pressure has resulted in elevated mortgage rates and adversely impacted consumer behavior.
Added
Any sustained weakness in consumer demand – whether due to prolonged high borrowing costs, low housing turnover, reduced consumer confidence, or an economic downturn – would adversely affect our sales and profitability.
Removed
High interest rates, housing affordability, and any such shift in consumer behavior may adversely affect the demand for existing homes, remodeling, and new home construction.
Added
Prolonged macroeconomic headwinds could lead to continued negative same store sales, inventory build-up, and the need for heavier promotions to stimulate demand, which in turn would further pressure our margins and cash flow and could continue to adversely affect our business, financial condition, and operating results.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeDuring fiscal years 2024, 2023, and 2022, we did not experience a material information security breach incident, and the expenses we have incurred from information security breach incidents have been immaterial. We are not currently aware of any cybersecurity risks that are reasonably likely to materially affect our business.
Biggest changeDuring fiscal years 2025, 2024, and 2023, we did not experience a material information security breach, and the expenses we have incurred from information security incidents have been immaterial. We are not currently aware of any cybersecurity risks that are reasonably likely to materially affect our business.
The incident response plan includes a procedure for notifying the CISO and CIO of any incident as well as a procedure for reporting any material incidents to the Audit Committee of our Board (the “Audit Committee”) and Board as appropriate. 23 Table of Contents Our cybersecurity risk program is structured according to the National Institute of Standards and Technology (NIST) Cybersecurity framework.
The incident response plan includes a procedure for notifying the CISO and CIO of any incident as well as a procedure for reporting any material incidents to the Audit Committee of our Board (the “Audit Committee”) and Board as appropriate. 22 Table of Contents Our cybersecurity program is structured according to the National Institute of Standards and Technology (NIST) Cybersecurity Framework.
Our enterprise risk management program is reviewed annually with our Board. We maintain a system of data protection and cybersecurity resources, technology, and processes. We regularly evaluate new and emerging risks and ever-changing legal and compliance requirements. We make strategic investments to address these risks and compliance requirements.
Our enterprise risk management program is reviewed annually with our Board. We maintain a comprehensive framework of data protection and cybersecurity resources, technologies, and procedures. We regularly evaluate new and emerging risks and ever-changing legal and compliance requirements. We make strategic investments to address these risks and compliance requirements.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeAs of December 26, 2024, we operated 251 warehouse-format stores located in 38 states as shown in the table below: State Number of Stores State Number of Stores Alabama 4 Nebraska 1 Arizona 7 Nevada 4 California 27 New Hampshire 1 Colorado 8 New Jersey 12 Connecticut 3 New Mexico 1 Florida 33 New York 10 Georgia 13 North Carolina 5 Illinois 11 Ohio 7 Indiana 2 Oklahoma 2 Iowa 1 Oregon 2 Kansas 2 Pennsylvania 4 Kentucky 2 Rhode Island 1 Louisiana 4 South Carolina 3 Maine 1 Tennessee 5 Maryland 6 Texas 33 Massachusetts 7 Utah 3 Michigan 4 Virginia 9 Minnesota 3 Washington 5 Missouri 3 Wisconsin 2 Total 251 24 Table of Contents The following table presents the percentage of our owned versus leased facilities in operation at the end of fiscal 2024 and their total square footage: square footage in thousands Owned Leased Total Square Footage Stores 7 % 93 % 19,307 Distribution centers 20 % 80 % 5,680 Offices and other — % 100 % 546 Total 25,533 Stores include our 251 warehouse-format stores and five small-format design studios.
Biggest changeAs of December 25, 2025, we operated 270 warehouse-format stores located in 39 states as shown in the table below: State Number of Stores State Number of Stores Alabama 4 Nebraska 1 Arizona 9 Nevada 4 California 30 New Hampshire 1 Colorado 8 New Jersey 12 Connecticut 3 New Mexico 1 Florida 36 New York 11 Georgia 13 North Carolina 7 Idaho 1 Ohio 7 Illinois 11 Oklahoma 2 Indiana 2 Oregon 3 Iowa 1 Pennsylvania 4 Kansas 2 Rhode Island 1 Kentucky 2 South Carolina 5 Louisiana 5 Tennessee 6 Maine 1 Texas 33 Maryland 6 Utah 3 Massachusetts 7 Virginia 9 Michigan 4 Washington 7 Minnesota 3 Wisconsin 2 Missouri 3 Total 270 23 Table of Contents The following table presents the percentage of our owned versus leased facilities in operation at the end of fiscal 2025 and their total square footage: square footage in thousands Owned Leased Total Square Footage Stores 7 % 93 % 20,473 Distribution centers 17 % 83 % 7,008 Offices and other — % 100 % 510 Total 27,991 Stores include our 270 warehouse-format stores and five small-format design studios.
Distribution centers include our four distribution centers located in or near Houston, Savannah, Los Angeles, and Baltimore and our transload facility near Los Angeles.
Distribution centers include our five distribution centers located in or near Houston, Savannah, Los Angeles, Baltimore, and Seattle and our transload facility near Los Angeles.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

2 edited+1 added−0 removed0 unchanged
Biggest changeRegardless of the outcome, litigation can have an adverse impact on us because of defense and settlement costs, diversion of management resources, and other factors. See the information disclosed under “Litigation” in Note 9, “Commitments and Contingencies” of the notes to our consolidated financial statements included in this Annual Report for further detail on legal proceedings.
Biggest changeSee the information disclosed under “Litigation” in Note 9, “Commitments and Contingencies” of the notes to our consolidated financial statements included in this Annual Report for further detail on legal proceedings.
ITEM 3. LEGAL PROCEEDINGS. We are engaged in various legal actions, claims and proceedings arising in the ordinary course of business, including claims related to breach of contracts, product liabilities, intellectual property matters, and employment-related matters resulting from our business activities. As with most actions such as these, an estimation of any possible and/or ultimate liability cannot always be determined.
ITEM 3. LEGAL PROCEEDINGS. We are engaged in various legal actions, claims and proceedings arising in the ordinary course of business, including claims related to breach of contracts, personal injury, product liabilities, intellectual property matters, and employment-related matters resulting from our business activities.
Added
As with most actions such as these, an estimation of any possible and/or ultimate liability cannot always be determined. Regardless of the outcome, litigation can have an adverse impact on us because of defense and settlement costs, diversion of management resources, and other factors.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

4 edited+1 added−2 removed3 unchanged
Biggest changeFiscal Year Ended FND S&P 500 Index S&P 500 Home Improvement Retail Index December 26, 2019 $ 100.00 $ 100.00 $ 100.00 December 31, 2020 $ 184.59 $ 115.93 $ 124.08 December 30, 2021 $ 258.41 $ 147.50 $ 193.46 December 29, 2022 $ 141.13 $ 118.81 $ 151.76 December 28, 2023 $ 226.42 $ 147.64 $ 165.38 December 26, 2024 $ 200.93 $ 186.35 $ 187.30 Unregistered Sales of Equity Securities and Use of Proceeds During fiscal 2024, the Company did not sell any unregistered equity securities.
Biggest changeFiscal Year Ended FND S&P 500 Index S&P 500 Home Improvement Retail Index December 31, 2020 $ 100.00 $ 100.00 $ 100.00 December 30, 2021 $ 139.99 $ 129.04 $ 158.85 December 29, 2022 $ 76.46 $ 105.66 $ 127.48 December 28, 2023 $ 122.66 $ 133.47 $ 142.50 December 26, 2024 $ 108.85 $ 170.78 $ 165.12 December 25, 2025 $ 68.08 $ 198.60 $ 152.79 Unregistered Sales of Equity Securities and Use of Proceeds During fiscal 2025, the Company did not sell any unregistered equity securities.
Any future determination to pay dividends will be at the discretion of our Board and will depend on then existing conditions, including our operating results, financial condition, contractual restrictions, capital requirements, business prospects and other factors that our Board may deem relevant. 25 Table of Contents Stock Performance Graph The following graph shows a comparison of cumulative total return to holders of our common stock against the cumulative total return of the S&P 500 Index and the S&P 500 Home Improvement Retail Index for our fiscal years 2020 through 2024.
Any future determination to pay dividends will be at the discretion of our Board and will depend on then existing conditions, including our operating results, financial condition, contractual restrictions, capital requirements, business prospects and other factors that our Board may deem relevant. 24 Table of Contents Stock Performance Graph The following graph shows a comparison of cumulative total return to holders of our common stock against the cumulative total return of the S&P 500 Index and the S&P 500 Home Improvement Retail Index for our fiscal years 2021 through 2025.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES. Market Information Our common stock has been listed for trading on the New York Stock Exchange under the symbol “FND” since April 27, 2017. On February 17, 2025, there were 19 stockholders of record of our Class A common stock.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES. Market Information Our common stock has been listed for trading on the New York Stock Exchange under the symbol “FND” since April 27, 2017. On February 16, 2026, there were 15 stockholders of record of our Class A common stock.
The comparison of the cumulative total returns for each investment assumes that $100 was invested in our Class A common stock and the respective indices on December 26, 2019 (the last trading day of fiscal 2019) through December 26, 2024, including reinvestment of any dividends.
The comparison of the cumulative total returns for each investment assumes that $100 was invested in our Class A common stock and the respective indices on December 31, 2020 (the last trading day of fiscal 2020) through December 25, 2025, including reinvestment of any dividends.
Removed
Issuer Purchases of Equity Securities The following table presents the number and average price of the Company’s common shares repurchased in each fiscal month of the fourth quarter of fiscal 2024: Period Total Number of Shares Purchased (1) Average Price Paid per Share (1) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (1) Maximum Dollar Value of Shares That May Yet Be Purchased Under the Plans or Programs (1) September 27, 2024 - October 24, 2024 — $ — N/A N/A October 25, 2024 - November 21, 2024 63 103.76 N/A N/A November 22, 2024 - December 26, 2024 — — N/A N/A Total 63 $ 103.76 N/A N/A (1) Under the Floor & Decor Holdings, Inc. 2017 Stock Incentive Plan (the “2017 Plan”), participants may surrender shares as payment of applicable tax withholding on the vesting of restricted stock awards.
Added
Issuer Purchases of Equity Securities During the fiscal quarter ended December 25, 2025, the Company did not repurchase any shares of our common stock.
Removed
Shares so surrendered by participants in the 2017 Plan are repurchased pursuant to the terms of the 2017 Plan and applicable award agreements and not pursuant to any publicly announced share repurchase programs.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

55 edited+9 added−21 removed59 unchanged
Biggest changeThe following tables summarize key components of our results of operations for the periods indicated: Fiscal Year Ended December 26, 2024 December 28, 2023 Increase (Decrease) dollars in thousands Amount % of Net Sales Amount % of Net Sales $ % Net sales $ 4,455,770 100.0 % $ 4,413,884 100.0 % $ 41,886 0.9 % Cost of sales 2,527,519 56.7 2,555,536 57.9 (28,017) (1.1) % Gross profit 1,928,251 43.3 1,858,348 42.1 69,903 3.8 % Operating expenses: Selling and store operating 1,362,325 30.6 1,239,225 28.1 123,100 9.9 % General and administrative 266,165 6.0 252,713 5.7 13,452 5.3 % Pre-opening 43,585 0.9 44,982 1.0 (1,397) (3.1) % Total operating expenses 1,672,075 37.5 1,536,920 34.8 135,155 8.8 % Operating income 256,176 5.8 321,428 7.3 (65,252) (20.3) % Interest expense, net 2,773 0.1 9,897 0.2 (7,124) (72.0) % Income before income taxes 253,403 5.7 311,531 7.1 (58,128) (18.7) % Income tax expense 47,531 1.1 65,551 1.5 (18,020) (27.5) % Net income $ 205,872 4.6 % $ 245,980 5.6 % $ (40,108) (16.3) % Fiscal Year Ended December 26, 2024 December 28, 2023 Comparable store sales (7.1) % (7.1) % Comparable average ticket (2.5) % 0.2 % Comparable transactions (4.7) % (7.2) % Number of warehouse-format stores 251 221 Adjusted EBITDA (in thousands) (1) $ 512,504 $ 551,133 Adjusted EBITDA (% of net sales) 11.5 % 12.5 % (1) Refer to “Reconciliation of Non-GAAP Financial Measures” below for a reconciliation of Adjusted EBITDA to net income. 31 Table of Contents Net Sales Net sales during fiscal 2024 increased $41.9 million, or 0.9%, compared to fiscal 2023 due to sales from the 30 new warehouse-format stores that we opened during the year and growth in Spartan, partially offset by a decrease in comparable store sales of 7.1%.
Biggest changeThe following tables summarize key components of our results of operations for the periods indicated: Fiscal Year Ended December 25, 2025 December 26, 2024 Increase (Decrease) dollars in thousands Amount % of Net Sales Amount % of Net Sales $ % Net sales $ 4,684,088 100.0 % $ 4,455,770 100.0 % $ 228,318 5.1 % Cost of sales 2,640,180 56.4 2,527,519 56.7 112,661 4.5 % Gross profit 2,043,908 43.6 1,928,251 43.3 115,657 6.0 % Selling, general and administrative expenses 1,773,838 37.8 1,672,075 37.5 101,763 6.1 % Operating income 270,070 5.8 256,176 5.8 13,894 5.4 % Interest expense, net 3,409 0.1 2,773 0.1 636 22.9 % Income before income taxes 266,661 5.7 253,403 5.7 13,258 5.2 % Income tax expense 58,014 1.2 47,531 1.1 10,483 22.1 % Net income $ 208,647 4.5 % $ 205,872 4.6 % $ 2,775 1.3 % Fiscal Year Ended December 25, 2025 December 26, 2024 Comparable store sales (1.8) % (7.1) % Comparable average ticket 1.8 % (2.5) % Comparable transactions (3.5) % (4.7) % Number of warehouse-format stores 270 251 Adjusted EBITDA (in thousands) (1) $ 538,171 $ 512,504 Adjusted EBITDA (% of net sales) (1) 11.5 % 11.5 % (1) Refer to “Reconciliation of Non-GAAP Financial Measures” further below for a reconciliation of Adjusted EBITDA to net income. 29 Table of Contents Net Sales Net sales during fiscal 2025 increased $228.3 million, or 5.1%, compared to fiscal 2024 primarily due to sales from the 20 new warehouse-format stores that we opened during the year, partially offset by a decrease in comparable store sales of 1.8%.
For information about the potential impacts that risks, such as declines in economic conditions that affect the residential housing market and consumer spending for hard surface flooring, interest rates, inflation, global supply chain disruptions, regulatory and political conditions, trade policy, and geopolitical instability, among others, may have on our results of operations and overall financial performance for future periods, see “Overview” further above and Item 1A, “Risk Factors” in Part I of this Annual Report.
For information about the potential impacts that risks, such as declines in economic conditions that affect the residential housing market and consumer spending for hard surface flooring, interest rates, inflation, global supply chain disruptions, regulatory and political conditions, tariffs and trade policy, and geopolitical instability, among others, may have on our results of operations and overall financial performance for future periods, see “Overview” further above and Item 1A, “Risk Factors” in Part I of this Annual Report.
Cost of sales consists of merchandise costs, as well as freight costs to transport inventory to our distribution centers and stores, and duty and other costs that are incurred to distribute the merchandise to our stores. Cost of sales also includes shrink, damage, warehousing costs, sourcing and compliance costs.
Cost of sales consists of merchandise costs, as well as freight costs to transport inventory to our distribution centers and stores, and duty and other costs that are incurred to distribute the merchandise to our stores. Cost of sales also includes costs for shrink, damage, warehousing, sourcing, and compliance.
Management uses gross profit and gross margin, among other measures, to make decisions related to product, pricing, supplier, and distribution strategies as well as other areas affecting the products we offer to our customers. 28 Table of Contents Operating Income, EBITDA, and Adjusted EBITDA Operating income, EBITDA, and Adjusted EBITDA are key metrics used by management and our Board to assess our financial performance and enterprise value.
Management uses gross profit and gross margin, among other measures, to make decisions related to product, pricing, supplier, and distribution strategies as well as other areas affecting the products we offer to our customers. 27 Table of Contents Operating Income, EBITDA, and Adjusted EBITDA Operating income, EBITDA, and Adjusted EBITDA are key metrics used by management and our Board to assess our financial performance and enterprise value.
The key measures we use to determine how our business is performing are comparable store sales, the number of new store openings, gross profit and gross margin, operating income, and EBITDA and Adjusted EBITDA. 27 Table of Contents Comparable Store Sales Our comparable store sales growth is a significant driver of our net sales, profitability, cash flow, and overall business results.
The key measures we use to determine how our business is performing are comparable store sales, the number of new store openings, gross profit and gross margin, operating income, and EBITDA and Adjusted EBITDA. 26 Table of Contents Comparable Store Sales Our comparable store sales growth is a significant driver of our net sales, profitability, cash flow, and overall business results.
For fiscal 2024, we were not party to any material off-balance sheet arrangements that are reasonably likely to have a current or future effect on our financial condition, net sales, expenses, results of operations, liquidity, capital expenditures, or capital resources.
For fiscal 2025, we were not party to any material off-balance sheet arrangements that are reasonably likely to have a current or future effect on our financial condition, net sales, expenses, results of operations, liquidity, capital expenditures, or capital resources.
Amounts for both fiscal 2024 and fiscal 2023 relate to changes in the fair value of contingent earn-out liabilities. Liquidity and Capital Resources Liquidity is provided primarily by cash flows from operations and our $800.0 million ABL Facility.
Amounts for both fiscal 2025 and fiscal 2024 relate to changes in the fair value of contingent earn-out liabilities. Liquidity and Capital Resources Liquidity is provided primarily by cash flows from operations and our $800.0 million ABL Facility.
We believe that comparable store sales growth is generated by continued focus on providing a dynamic and expanding product assortment in addition to other merchandising initiatives, quality of customer service, enhancing sales and marketing strategies, improving visual merchandising and overall aesthetic appeal of our stores and our website, effectively serving our Pro customers, continued investment in store staff and infrastructure, growing our proprietary credit offering, and further integrating connected customer strategies and other key information technology enhancements.
We believe that comparable store sales growth is generated by continued focus on providing a dynamic and expanding product assortment in addition to other merchandising initiatives, quality of customer service, enhancing sales and marketing strategies, improving visual merchandising and overall aesthetic appeal of our stores and our website, effectively serving our Pro customers, continued investment in store staff and infrastructure, and further integrating connected customer strategies and other key information technology enhancements.
We believe that our inspiring design centers and creative and informative visual merchandising also greatly enhance our customers’ renovation experience. In addition to our stores, our website, FloorandDecor.com , showcases our products.
We believe that our inspiring design centers and creative and informative visual merchandising also greatly enhance our customers’ renovation experience. In addition to our stores, our website showcases our products.
Net Cash Used in Financing Activities Financing activities consist primarily of borrowings and related repayments under our credit agreements, tax payments related to the vesting or exercise of stock-based compensation awards, proceeds from the exercise of stock options and our employee share purchase program, and payments of contingent earn-out consideration.
Net Cash Used in Financing Activities Financing activities consist primarily of borrowings and related repayments under our Credit Facilities, tax payments related to the vesting or exercise of stock-based compensation awards, proceeds from the exercise of stock options and our employee stock purchase program, and payments of contingent earn-out consideration.
Our material cash requirements over the next several periods from known contractual or other obligations as of December 26, 2024 are described below. Operating Leases. We enter into operating leases during the normal course of business. Most lease arrangements provide us with the option to renew the leases at defined terms.
Our material cash requirements over the next several periods from known contractual or other obligations as of December 25, 2025 are described below. Operating Leases. We enter into operating leases during the normal course of business. Most lease arrangements provide us with the option to renew the leases at defined terms.
The future operating lease obligations would change if we were to exercise these options or enter into additional operating leases. Refer to Note 9, “Commitments and Contingencies” of the notes to our consolidated financial statements included in this Annual Report for a summary of our operating lease obligations as of December 26, 2024. Debt.
The future operating lease obligations would change if we were to exercise these options or enter into additional operating leases. Refer to Note 9, “Commitments and Contingencies” of the notes to our consolidated financial statements included in this Annual Report for a summary of our operating lease obligations as of December 25, 2025. Debt.
We believe these factors directly contributed to a slowdown in demand for flooring resulting in year-over-year declines in our comparable store sales and net income. These factors, coupled with rising construction costs, have made it difficult to achieve new store initial sales and profitability targets compared with those opened in prior years.
We believe these factors directly contributed to a slowdown in demand for flooring resulting in a year-over-year decline in our comparable store sales. These factors, coupled with rising construction costs, have made it difficult to achieve new store initial sales and profitability targets compared with those opened in prior years.
As of December 26, 2024, our Standard & Poor’s issuer credit rating of BB with a stable outlook and Moody’s issuer credit rating of Ba3 with a stable outlook remain unchanged from December 28, 2023. These ratings and our current credit condition affect, among other things, our ability to access new capital.
As of December 25, 2025, our Standard & Poor’s issuer credit rating of BB with a stable outlook and Moody’s issuer credit rating of Ba3 with a stable outlook remain unchanged from December 26, 2024. These ratings and our current credit condition affect, among other things, our ability to access new capital.
Refer to Note 10, “Debt” of the notes to our consolidated financial statements included in this Annual Report for a summary of our long-term debt obligations as of December 26, 2024. Purchase Obligations. Purchase obligations include agreements to purchase goods or services that are legally binding and non-cancellable.
Refer to Note 10, “Debt” of the notes to our consolidated financial statements included in this Annual Report for a summary of our long-term debt obligations as of December 25, 2025. Purchase Obligations. Purchase obligations include agreements to purchase goods or services that are legally binding and non-cancelable.
We issue inventory purchase orders in the normal course of business, which are typically cancellable by their terms and are excluded from the amounts above. Performance Guarantees. In the ordinary course of business, we are required to post letters of credit as financial guarantees of our performance. As of December 26, 2024, letters of credit totaled $37.1 million.
We issue inventory purchase orders in the normal course of business, which are typically cancellable by their terms and are excluded from the amounts above. Performance Guarantees. In the ordinary course of business, we are required to post letters of credit as financial guarantees of our performance. As of December 25, 2025, letters of credit totaled $38.1 million.
(b) Non-cash charges related to stock-based compensation programs, which vary from period to period depending on the timing of awards and forfeitures. (c) Net proceeds received related to the derivative litigation settlement in fiscal 2024. (d) Other adjustments include amounts management does not consider indicative of our core operating performance.
(2) Represents non-cash charges related to stock-based compensation programs, which vary from period to period depending on the timing of awards and forfeitures. (3) Represents net proceeds received related to the derivative litigation settlement in fiscal 2024. (4) Other adjustments include amounts management does not consider indicative of our core operating performance.
For additional segment information, refer to Note 14, “Segment Reporting” of the notes to the consolidated financial statements included in this Annual Report. 30 Table of Contents Results of Operations The comparison of the fiscal years ended December 28, 2023 and December 29, 2022 can be found in our annual report on Form 10-K for the fiscal year ended December 28, 2023 (the “2023 Annual Report”) located within Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Results of operations for prior periods should not be considered indicative of future results.
For additional segment information, refer to Note 14, “Segment Reporting” of the notes to the consolidated financial statements included in this Annual Report. 28 Table of Contents Results of Operations The comparison of the fiscal years ended December 26, 2024 and December 28, 2023 can be found in our annual report on Form 10-K for the fiscal year ended December 26, 2024 (the “2024 Annual Report”) located within Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Results of operations for any period should not be considered indicative of future results.
We appeal to a variety of customers, including Pros and homeowners, which are comprised of DIY and BIY customers. Our warehouse-format stores, which average approximately 77,000 square feet, carry on average approximately 4,400 SKUs, approximately 1.0 million square feet of flooring products, and $2.7 million of inventory at cost as of December 26, 2024.
We appeal to a variety of customers, including Pros and homeowners, which are comprised of DIY and BIY customers. Our warehouse-format stores, which average approximately 76,000 square feet, carry on average approximately 4,200 SKUs, approximately 1.0 million square feet of flooring products, and $2.7 million of inventory at cost as of December 25, 2025.
A 10% change in our sales returns reserves and related return asset accruals at December 26, 2024 would have had a net impact of approximately $1.3 million on operating income in fiscal 2024.
A 10% change in our sales returns reserves and related return asset accruals at December 25, 2025 would have had a net impact of approximately $1.4 million on operating income in fiscal 2025.
Overview Founded in 2000, Floor & Decor is a high-growth, differentiated, multi-channel specialty retailer of hard surface flooring and related accessories and seller of commercial surfaces with 251 warehouse-format stores across 38 states as of December 26, 2024.
Overview Founded in 2000, Floor & Decor is a high-growth, differentiated, multi-channel specialty retailer of hard surface flooring and related accessories and seller of commercial surfaces with 270 warehouse-format stores across 39 states as of December 25, 2025.
Total capital expenditures in fiscal 2025 are planned to be between approximately $330 million to $400 million and are expected to be funded primarily by cash generated from operations and borrowings under the ABL Facility. Our capital needs may change in the future due to changes in our business, new opportunities that we choose to pursue, or other factors.
Total capital expenditures in fiscal 2026 are planned to be between approximately $250 million to $300 million and are expected to be funded primarily by cash generated from operations. Our capital needs may change in the future due to changes in our business, new opportunities that we choose to pursue, or other factors.
As we continue to manage the impact these tariffs may have on our business, we continue taking steps to mitigate some of these cost increases through negotiating lower costs from our vendors, sourcing from alternative countries, and increasing retail pricing as we deem appropriate.
As we continue to manage the impact these tariffs may have on our business and the complexities of the various trade policy actions, we continue taking steps to mitigate some of the cost increases through negotiations with our vendors, sourcing from alternative countries, and increasing retail pricing as we deem appropriate.
Consequently, our class of 2022, 2023, and 2024 new stores are experiencing lower first year sales and initial returns compared to new stores opened in prior years. To optimize our return on investment, we focused on strategically reducing the construction costs and operating expenses.
Consequently, our more recent new store classes are experiencing lower first year sales and initial returns compared to new stores opened in years prior to 2022. To optimize our return on investment, we focus on strategically reducing the construction costs and operating expenses.
Our purchase obligations primarily relate to certain software and license commitments, advertising programs, and enterprise resource planning system costs. The reported amounts exclude liabilities included in our Consolidated Balance Sheet. As of December 26, 2024, purchase obligations totaled $82.2 million, of which $44.5 million is due within 12 months.
Our purchase obligations primarily relate to certain software and license commitments, advertising programs, and enterprise resource planning costs. The reported amounts exclude liabilities included in our Consolidated Balance Sheet. As of December 25, 2025, purchase obligations totaled $63.4 million, of which $36.4 million is due within 12 months.
The estimates have calculations that require management to make assumptions based on the current rate of sales, age, salability and profitability of inventory, historical percentages that can be affected by changes in our merchandising mix, customer preferences, and changes in actual shrink trends. Effect if actual results differ from assumptions.
These provisions are calculated based on historical shrink, selling prices, margins, and current business trends. The estimates have calculations that require management to make assumptions based on the current rate of sales, age, salability and profitability of inventory, historical percentages that can be affected by changes in our merchandising mix, customer preferences, and changes in actual shrink trends.
We currently expect the following for capital expenditures in fiscal 2025: • invest approximately $200 million to $245 million to open 25 warehouse-format stores and begin construction on stores opening after fiscal 2025; • invest approximately $20 million to $25 million in new distribution centers near Seattle and Baltimore; • invest approximately $50 million to $60 million in existing stores and distribution centers; and • invest approximately $60 million to $70 million in information technology infrastructure, e-commerce, and other store support center initiatives. 33 Table of Contents Cash Flow Analysis A summary of our operating, investing, and financing activities is shown in the following table: Fiscal Year Ended in thousands December 26, 2024 December 28, 2023 Net cash provided by operating activities $ 603,155 $ 803,589 Net cash used in investing activities (446,826) (564,966) Net cash used in financing activities (3,042) (214,035) Net increase in cash and cash equivalents $ 153,287 $ 24,588 Net Cash Provided by Operating Activities Cash provided by operating activities consists primarily of (i) net income adjusted for non-cash items, including depreciation and amortization, stock-based compensation, deferred income taxes, and changes in the fair values of contingent earn-out liabilities and (ii) changes in working capital.
We currently expect the following for capital expenditures in fiscal 2026: • invest approximately $160 million to $190 million to open 20 warehouse-format stores, relocate stores, and begin construction on stores opening after fiscal 2026; • invest approximately $60 million to $70 million in existing stores and new and existing distribution centers; and • invest approximately $30 million to $40 million in information technology infrastructure, e-commerce, and other store support center initiatives. 31 Table of Contents Cash Flow Analysis A summary of our operating, investing, and financing activities is shown in the following table: Fiscal Year Ended in thousands December 25, 2025 December 26, 2024 Net cash provided by operating activities $ 381,836 $ 603,155 Net cash used in investing activities (317,764) (446,826) Net cash used in financing activities (2,445) (3,042) Net increase in cash and cash equivalents $ 61,627 $ 153,287 Net Cash Provided by Operating Activities Cash provided by operating activities consists primarily of (i) net income adjusted for non-cash items, including depreciation and amortization, stock-based compensation, and deferred income taxes and (ii) changes in working capital.
The comparable store sales decline during the period of 7.1%, or $299.1 million, was due to a 4.7% decrease in comparable transactions and a 2.5% decrease in comparable average ticket. We believe the decrease in comparable transactions was largely driven by the impact of lower existing home sales.
The comparable store sales decline during the period of 1.8%, or $77.4 million, was due to a 3.5% decrease in comparable transactions, partially offset by a 1.8% increase in comparable average ticket. We believe the decrease in comparable transactions was largely driven by the continued impact of low existing home sales.
The following table presents a performance summary of our results of operations for fiscal years 2024 and 2023: Fiscal Year Ended dollars in thousands December 26, 2024 December 28, 2023 Net sales $ 4,455,770 $ 4,413,884 Net income $ 205,872 $ 245,980 Adjusted EBITDA $ 512,504 $ 551,133 Comparable store sales (7.1) % (7.1) % Number of warehouse-format stores 251 221 During fiscal 2024, we opened 30 new warehouse-format stores, ending the year with 251 warehouse-format stores and five design studios.
The following table presents a performance summary of our results of operations for fiscal years 2025 and 2024: Fiscal Year Ended dollars in thousands December 25, 2025 December 26, 2024 Net sales $ 4,684,088 $ 4,455,770 Net income $ 208,647 $ 205,872 Adjusted EBITDA $ 538,171 $ 512,504 Comparable store sales (1.8) % (7.1) % Number of warehouse-format stores 270 251 During fiscal 2025, we opened 20 new warehouse-format stores and closed one warehouse-format store, ending the year with 270 warehouse-format stores and five design studios.
Definitions and calculations of comparable store sales differ among companies in the retail industry; therefore, comparable store metrics disclosed by us may not be comparable to the metrics disclosed by other companies.
When a fiscal year includes a 53rd week, we exclude the 53rd week of sales from our calculation. Definitions and calculations of comparable store sales differ among companies in the retail industry; therefore, comparable store metrics disclosed by us may not be comparable to the metrics disclosed by other companies.
Unrestricted liquidity as of December 26, 2024 was $905.7 million, consisting of $187.7 million in cash and cash equivalents and $718.0 million immediately available for borrowing under the ABL Facility without violating any covenants thereunder. Our liquidity is generally not seasonal.
Unrestricted liquidity as of December 25, 2025 was $909.8 million, consisting of $249.3 million in cash and cash equivalents and $660.5 million immediately available for borrowing under the ABL Facility without violating any covenants thereunder. Our liquidity is generally not seasonal.
Management evaluated the development and selection of its critical accounting policies and estimates and believes that the following accounting policies are critical as they involve a higher degree of judgment or complexity and are the most significant to reporting our results of operations and financial position.
Actual results may differ under different assumptions and conditions, and such differences could be material to the consolidated financial statements. 33 Table of Contents Management evaluated the development and selection of its critical accounting policies and estimates and believes that the following accounting policies are critical as they involve a higher degree of judgment or complexity and are the most significant to reporting our results of operations and financial position.
As a percentage of net sales, selling and store operating expenses increased by approximately 250 basis points to 30.6% from 28.1% in fiscal 2023. This increase was primarily attributable to deleverage from a decrease in comparable store sales and the addition of new stores.
As a percentage of net sales, SG&A expenses increased by approximately 30 basis points to 37.8% from 37.5% in fiscal 2024. This increase was primarily attributable to the addition of new stores and deleverage from a decrease in comparable store sales, partially offset by a decrease in pre-opening expenses.
Judgments and uncertainties involved in the estimate. For vendor allowances, we develop accrual rates based on the provisions of the agreements in place. We perform analyses and review historical purchase trends and volumes throughout the year, adjust accrual rates as appropriate, and confirm actual amounts with select vendors to ensure the amounts earned are appropriately recorded.
We perform analyses and review historical purchase trends and volumes throughout the year, adjust accrual rates as appropriate, and confirm actual amounts with select vendors to ensure the amounts earned are appropriately recorded.
Management evaluates its accounting policies, estimates, and judgments on an ongoing basis. Management bases its estimates and judgments on historical experience and various other factors that are believed to be reasonable under the circumstances. Actual results may differ under different assumptions and conditions, and such differences could be material to the consolidated financial statements.
Management evaluates its accounting policies, estimates, and judgments on an ongoing basis. Management bases its estimates and judgments on historical experience and various other factors that are believed to be reasonable under the circumstances.
Recently Adopted and Recently Issued Accounting Pronouncements Refer to Note 1, “Summary of Significant Accounting Policies” of the notes to the consolidated financial statements included in this Annual Report for information on the recently adopted and recently issued accounting pronouncements that are applicable to the Company. 35 Table of Contents Critical Accounting Policies and Estimates The preparation of financial statements in accordance with accounting principles generally accepted in the United States requires management to make estimates and assumptions about future events that affect amounts reported in our consolidated financial statements and related notes as well as the related disclosure of contingent assets and liabilities at the date of the financial statements.
Critical Accounting Policies and Estimates The preparation of financial statements in accordance with accounting principles generally accepted in the United States requires management to make estimates and assumptions about future events that affect amounts reported in our consolidated financial statements and related notes as well as the related disclosure of contingent assets and liabilities at the date of the financial statements.
We capitalize transportation, duties, and other costs to get product to our retail locations. Judgments and uncertainties involved in the estimate. We provide provisions for losses related to shrink and other amounts that are otherwise not expected to be fully recoverable. These provisions are calculated based on historical shrink, selling prices, margins, and current business trends.
We capitalize transportation, duties, and other costs to get product to our retail locations. Judgments and uncertainties involved in the estimate. We provide provisions for losses related to shrink, net realizable value, aged inventory, special order merchandise, and other amounts that are otherwise not expected to be fully recoverable.
A 10% change in our inventory valuation and shrink reserves at December 26, 2024 would have affected operating income by approximately $0.7 million in fiscal 2024. Inventory valuation and shrink reserves typically fluctuate in proportion to changes in inventory balances. 36 Table of Contents Vendor Rebates and Allowances Description.
Effect if actual results differ from assumptions. A 10% change in our inventory valuation and shrink reserves at December 25, 2025 would have affected operating income by approximately $1.8 million in fiscal 2025. Inventory valuation and shrink reserves typically fluctuate in proportion to changes in inventory balances. Vendor Rebates and Allowances Description.
We expect that our selling and store operating expenses will increase in future periods with future growth. Selling and store operating expenses include variable as well as fixed components, which may not directly correlate with net sales.
We expect that our SG&A expenses will increase in future periods with future growth. SG&A expenses include variable as well as fixed components, which may not directly correlate with net sales. The components of our SG&A expenses may not be comparable to the components of similar measures of other retailers. Segments We have two operating segments and one reportable segment.
The effective tax rate decrease was primarily due to a decrease in state income taxes and an increase in excess tax benefits related to stock-based compensation awards that were partially offset by limitations on deductions for compensation to certain employees under Internal Revenue Code Section 162(m). 32 Table of Contents Reconciliation of Non-GAAP Financial Measures EBITDA and Adjusted EBITDA For the periods presented, the following table reconciles EBITDA and Adjusted EBITDA to net income, the most directly comparable financial measure calculated and presented in accordance with GAAP: Fiscal Year Ended in thousands December 26, 2024 December 28, 2023 Net income $ 205,872 $ 245,980 Depreciation and amortization (a) 230,293 199,856 Interest expense, net 2,773 9,897 Income tax expense 47,531 65,551 EBITDA 486,469 521,284 Stock-based compensation expense (b) 33,695 27,240 Litigation settlement recovery (c) (6,794) — Other (d) (866) 2,609 Adjusted EBITDA $ 512,504 $ 551,133 (a) Excludes amortization of deferred financing costs, which is included as part of interest expense, net.
The effective tax rate increase was primarily due to a decrease in excess tax benefits related to stock-based compensation awards. 30 Table of Contents Reconciliation of Non-GAAP Financial Measures EBITDA and Adjusted EBITDA For the periods presented, the following table reconciles EBITDA and Adjusted EBITDA to net income, the most directly comparable financial measure calculated and presented in accordance with GAAP: Fiscal Year Ended in thousands December 25, 2025 December 26, 2024 Net income $ 208,647 $ 205,872 Depreciation and amortization (1) 238,971 230,293 Interest expense, net 3,409 2,773 Income tax expense 58,014 47,531 EBITDA 509,041 486,469 Stock-based compensation expense (2) 29,505 33,695 Litigation settlement recovery (3) — (6,794) Other (4) (375) (866) Adjusted EBITDA $ 538,171 $ 512,504 (1) Excludes amortization of deferred financing costs, which is included as part of interest expense, net.
Net cash used in investing activities was $446.8 million for fiscal 2024 and $565.0 million for fiscal 2023. The decrease in net cash used in investing activities was due to a decrease in capital expenditures and cash paid for an acquisition in fiscal 2023.
Net cash used in investing activities was $317.8 million for fiscal 2025 and $446.8 million for fiscal 2024. The decrease in net cash used in investing activities was due to a decrease in capital expenditures primarily driven by a decrease in new stores under construction.
Vendor allowances earned are initially recorded as a reduction to the carrying value of inventory and a subsequent reduction in cost of sales when the related product is sold. Certain incentive allowances that are reimbursements of specific, incremental, and identifiable costs incurred to promote vendors’ products are recorded as an offset against these promotional expenses.
Vendor allowances earned are initially recorded as a reduction to the carrying value of inventory and a subsequent reduction in cost of sales when the related product is sold.
Our Credit Facilities As of December 26, 2024, total Term Loan Facility debt was $200.3 million, and no amounts were outstanding under our ABL Facility.
Net cash used in financing activities was $2.4 million for fiscal 2025 and $3.0 million for fiscal 2024. Our Credit Facilities As of December 25, 2025, total Term Loan Facility debt outstanding was $198.2 million, and no amounts were outstanding under our ABL Facility.
The housing market continued to be impacted by a number of macroeconomic factors during fiscal 2024, including elevated interest rates and higher home prices putting pressure on housing affordability. This resulted in a decline in existing home sales, inflation, and a continued shift in consumer spending toward services.
Additionally, we opened a new distribution center near Seattle, ending the year with five distribution centers. The housing market continued to be impacted by a number of macroeconomic factors during fiscal 2025, including elevated interest rates and higher home prices putting pressure on housing affordability, which resulted in low existing home sales.
Before we open new stores, we incur pre-opening expenses, which are defined below under the heading “Other Key Financial Definitions.” Net sales at new stores are generally lower than net sales at our stores that have been open for more than one year. Our ability to open new, profitable stores is important to our long-term sales and profit growth goals.
Net sales at new stores are generally lower than net sales at our stores that have been open for more than one year. Our ability to open new, profitable stores is important to our long-term sales and profit growth goals. Gross Profit and Gross Margin Our gross profit is variable in nature and generally follows changes in net sales.
The increase in gross profit was primarily driven by the 0.9% increase in net sales and an increase in gross margin to 43.3%, up approximately 120 basis points from 42.1% in fiscal 2023. The increase in gross margin was primarily driven by a decrease in supply chain costs.
Gross Profit and Gross Margin Gross profit during fiscal 2025 increased $115.7 million, or 6.0%, compared to fiscal 2024. The increase in gross profit was primarily driven by the 5.1% increase in net sales and an increase in gross margin to 43.6%, up approximately 30 basis points from 43.3% in fiscal 2024.
Income Tax Expense Income tax expense was $47.5 million in fiscal 2024 compared to $65.6 million in fiscal 2023. The effective tax rate was 18.8% for fiscal 2024 compared to 21.0% for fiscal 2023.
The effective tax rate was 21.8% for fiscal 2025 compared to 18.8% for fiscal 2024.
In particular, a weakening of our financial condition, including an increase in our leverage or decrease in our profitability or cash flows, could adversely affect our ability to obtain necessary funds, result in a credit rating downgrade or change in outlook, or otherwise increase our cost of borrowing. 34 Table of Contents Supply Chain Finance Programs As part of our ongoing efforts to improve cash flow and liquidity, we facilitate supply chain finance programs through financial intermediaries.
In particular, a weakening of our financial condition, including an increase in our leverage or decrease in our profitability or cash flows, could adversely affect our ability to obtain necessary funds, result in a credit rating downgrade or change in outlook, or otherwise increase our cost of borrowing. 32 Table of Contents Material Cash Requirements, including Contractual Obligations to Third Parties We enter into long-term obligations and commitments in the normal course of business, primarily non-cancelable operating leases and debt obligations.
Our gross profit and gross margin, which reflect our net sales and our cost of sales and any changes to the components thereof, allow us to evaluate our profitability and overall business results. Gross profit is calculated as net sales less cost of sales. Gross profit as a percentage of net sales is referred to as gross margin.
With respect to our merchandising assortment, certain of our products generate higher margins than other products within the same product categories or among different product categories. Our gross profit and gross margin, which reflect our net sales and our cost of sales and any changes to the components thereof, allow us to evaluate our profitability and overall business results.
Net cash provided by operating activities was $603.2 million for fiscal 2024 and $803.6 million for fiscal 2023.
Net cash provided by operating activities was $381.8 million for fiscal 2025 and $603.2 million for fiscal 2024. The decrease in net cash provided by operating activities was primarily driven by changes in trade accounts payable.
Tariffs and Global Economy The current domestic and international political environment, including existing and potential changes to U.S. policies related to global trade and tariffs, have resulted in uncertainty surrounding the future state of the global economy.
Tariffs and Global Economy The current geopolitical environment, particularly related to existing and potential changes in global trade and tariffs, has created uncertainty surrounding the future state of the global economy and related impacts to our supply chain. In 2025, the U.S. imposed significant additional tariffs on products from most countries where we source products.
Selling and Store Operating Expenses Selling and store operating expenses consist primarily of store personnel wages, bonuses and benefits, rent and infrastructure expenses, supplies, depreciation and amortization, training expenses, and advertising costs. Credit card fees, insurance, personal property taxes, and other miscellaneous operating costs are also included.
Selling, General and Administrative Expenses Selling, general and administrative (“SG&A”) expenses consist primarily of store and store support center wages, incentive compensation and benefits, store and store support center occupancy costs, depreciation and amortization, advertising costs, credit card fees, pre-opening costs, information technology costs, and other miscellaneous operating costs.
Selling and Store Operating Expenses Selling and store operating expenses during fiscal 2024 increased $123.1 million, or 9.9%, compared to fiscal 2023. The increase in selling and store operating expenses was primarily driven by $156.7 million for new stores and $5.6 million at Spartan, partially offset by a decrease of $39.2 million at our comparable stores.
The increase in gross margin was primarily driven by favorable product margin due to a decrease in supply chain costs, partially offset by an increase in distribution center costs. Selling, General and Administrative Expenses SG&A expenses during fiscal 2025 increased $101.8 million, or 6.1%, compared to fiscal 2024.
The decrease in comparable average ticket was primarily due to smaller average project sizes. Non-comparable sales of $341.0 million during the same period were primarily driven by new stores and, to a lesser extent, revenue from Spartan.
The increase in comparable average ticket was primarily due to changes in sales mix. Non-comparable sales increased $305.7 million compared to fiscal 2024 primarily driven by new stores. We estimate that retail sales during both fiscal 2025 and fiscal 2024 were approximately 50% from homeowners and 50% from Pros.
Interest Expense, Net Net interest expense during fiscal 2024 decreased $7.1 million, or 72.0%, compared to fiscal 2023 primarily due to a decrease in average amounts outstanding under our ABL Facility and higher interest income as a result of higher cash balances.
Interest Expense, Net Net interest expense during fiscal 2025 increased $0.6 million, or 22.9%, compared to fiscal 2024 primarily due to a decrease in capitalized interest, partially offset by lower average interest rates and lower average outstanding borrowings. Income Tax Expense Income tax expense was $58.0 million in fiscal 2025 compared to $47.5 million in fiscal 2024.
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Gross Profit and Gross Margin Our gross profit is variable in nature and generally follows changes in net sales.
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Before we open new stores, we incur operating expenditures, which are defined as pre-opening expenses. The majority of pre-opening expenses are incurred during the three months before a store opens. A new store’s operating performance is excluded from the comparable store base until the first day of the thirteenth full fiscal month following a store’s opening.
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With respect to our merchandising assortment, certain of our products generate higher margins than other products within the same product categories or among different product categories. We have experienced inflation increases in certain of our product categories but historically have been able to source from a different manufacturer or pass increases on to our consumers.
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Gross profit is calculated as net sales less cost of sales. Gross profit as a percentage of net sales is referred to as gross margin.
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The components of our selling and store operating expenses may not be comparable to the components of similar measures of other retailers. 29 Table of Contents General and Administrative Expenses General and administrative expenses consist primarily of costs incurred outside of our stores and include administrative personnel wages in our store support center and regional functions, bonuses and benefits, supplies, depreciation and amortization, and store support center expenses.
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The increase in SG&A expenses was primarily driven by the 20 new stores that we opened during the year, which increased compensation costs, occupancy costs, and depreciation and amortization expense. SG&A expenses for non-comparable stores increased $126.8 million and for comparable stores decreased $24.8 million.
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Insurance, legal expenses, information technology costs, consulting, and other miscellaneous operating costs are also included. We expect that our general and administrative expenses will increase in future periods with future growth. General and administrative expenses include fixed as well as variable components, which may not directly correlate with net sales.
Added
Although the U.S. has agreed to trade deals or frameworks for trade deals with certain countries and continues to negotiate with other countries, the timing of implementation and stability of these trade deals are unclear.
Removed
The components of our general and administrative expenses may not be comparable to the components of similar measures of other retailers. Pre-opening Expenses We account for non-capital operating expenditures incurred prior to opening a new store or relocating an existing store as “pre-opening” expenses in our Consolidated Statements of Operations and Comprehensive Income.
Added
Additionally, if the U.S. implements further tariffs, countries where we source products may impose new tariffs and other trade measures on the U.S. in response, resulting in potentially escalating trade conflict between the U.S. and its trading partners.
Removed
Our pre-opening expenses begin, on average, three months to one year in advance of a store opening or relocating due to, among other things, the amount of time it takes to prepare a store for its grand opening. The majority of pre-opening expenses are incurred during the three months before a store opens.
Added
While we continue to take steps to mitigate the overall effect of increased tariffs, these tariffs have increased and will continue to increase our inventory costs and associated cost of sales, which have resulted in and in the future may result in increased retail prices and may adversely impact sales.
Removed
Pre-opening expenses primarily include the following: rent, advertising, recruiting, training, utilities, personnel, and equipment rental. A store is considered to be relocated if it is closed temporarily and re-opened within the same primary trade area. Segments We have two operating segments and one reportable segment.
Added
Furthermore, the broader impact of increased tariffs on the economy has and in the future may negatively impact consumer demand for our products, which may also have an adverse impact on sales.
Removed
We estimate that retail sales during fiscal 2024 were approximately 51% from homeowners and 49% from Pros compared to approximately 55% from homeowners and 45% from Pros during fiscal 2023. Gross Profit and Gross Margin Gross profit during fiscal 2024 increased $69.9 million, or 3.8%, compared to fiscal 2023.
Added
Recently Adopted and Recently Issued Accounting Pronouncements Refer to Note 1, “Summary of Significant Accounting Policies” of the notes to the consolidated financial statements included in this Annual Report for information on the recently adopted and recently issued accounting pronouncements that are applicable to the Company.
Removed
General and Administrative Expenses General and administrative expenses during fiscal 2024 increased $13.5 million, or 5.3%, compared to fiscal 2023. Our general and administrative expenses as a percentage of net sales increased by approximately 30 basis points to 6.0% from 5.7% in fiscal 2023.
Added
Certain incentive allowances that are reimbursements of specific, incremental, and identifiable costs incurred to promote vendors’ products are recorded as an offset against these promotional expenses. 34 Table of Contents Judgments and uncertainties involved in the estimate. For vendor allowances, we develop accrual rates based on the provisions of the agreements in place.
Removed
The increase in general and administrative expenses in total and as a percentage of net sales was primarily driven by an increase of $21.3 million in personnel expenses due primarily to incentive compensation and additional staffing costs, partially offset by a legal settlement recovery of $6.8 million.
Removed
Pre-Opening Expenses Pre-opening expenses during fiscal 2024 decreased $1.4 million, or 3.1%, compared to fiscal 2023. The decrease in pre-opening expenses primarily resulted from a decrease in the number of stores that we opened compared to the prior year.
Removed
The decrease in net cash provided by operating activities was primarily driven by the change in inventory and a decline in cash earnings after adjusting net income for non-cash items, which were partially offset by an increase in trade accounts payable, accrued expenses and other current liabilities, and income taxes.
Removed
The year-over-year decline in capital expenditures was driven by the timing of construction payable settlements for recently completed stores and a decrease in new stores under construction.
Removed
Net cash used in financing activities was $3.0 million for fiscal 2024 and $214.0 million for fiscal 2023. The decrease in net cash used in financing activities was primarily driven by a decrease in net ABL Facility repayments.
Removed
Suppliers that participate in a supply chain finance program extend our payment terms by approximately 40 days on average.
Removed
Amounts due to financial intermediaries for suppliers that elected to participate in a supply chain finance program totaled $167.7 million and $114.0 million as of December 26, 2024 and December 28, 2023, respectively, and are included in trade accounts payable in our Consolidated Balance Sheets.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeImpact of Inflation/Deflation Substantial increases in costs, including the price of raw materials, labor, energy, transportation, and other inputs used in the production and distribution of our merchandise, could have a significant impact on our business and the industry.
Biggest changeFor additional information related to the Company’s Credit Facilities and the interest rate cap contract, refer to Note 10, “Debt” and Note 8, “Derivatives and Risk Management,” respectively, of the notes to the consolidated financial statements included in this Annual Report. 35 Table of Contents Impact of Inflation/Deflation Substantial increases in costs, including the price of raw materials, labor, energy, transportation, and other inputs used in the production and distribution of our merchandise, could have a significant impact on our business and the industry.
The interest rate cap agreement effectively caps SOFR-based interest payments on a portion of the Company’s Term Loan Facility at 5.50% beginning in May 2024 and will continue until the agreement expires in April 2026.
The interest rate cap contract effectively caps SOFR-based interest payments on a portion of the Company’s Term Loan Facility at 5.50% beginning in May 2024 and will continue until the interest rate cap contract expires in April 2026.
To lessen our exposure to interest rate risk, we entered into an interest rate cap agreement in January 2024 with a notional value of $150.0 million.
To lessen our exposure to interest rate risk, we entered into an interest rate cap contract in January 2024 with a notional value of $150.0 million.
To date, such fluctuations have not had a material impact on our financial condition or results of operations. 38 Table of Contents
To date, such fluctuations have not had a material impact on our financial condition or results of operations. 36 Table of Contents
Based on the $200.3 million total outstanding principal balance of our Credit Facilities as of December 26, 2024, a 1.0% increase in the effective interest rate of this debt would cause an increase in interest expense of approximately $2.0 million over the next twelve months, excluding the impact of our interest rate cap agreement.
Based on the $198.2 million total outstanding principal balance of our Credit Facilities as of December 25, 2025, a 1.0% increase in the effective interest rate of this debt would cause an increase in interest expense of approximately $2.0 million over the next twelve months, excluding the impact of our interest rate cap contract.
Due to the number of currencies involved, we cannot quantify the potential impact of future currency fluctuations on net income or loss in future years.
Due to the number of currencies involved, we cannot quantify the potential impact of future currency fluctuations on net income or loss in future years. To date, such exchange fluctuations have not had a material impact on our financial condition or results of operations.
To date, such exchange fluctuations have not had a material impact on our financial condition or results of operations. 37 Table of Contents Interest Rate Risk Our operating results are subject to risk from interest rate fluctuations on our Credit Facilities, which have variable interest rates.
Interest Rate Risk Our operating results are subject to risk from interest rate fluctuations on our Credit Facilities, which have variable interest rates.
Removed
We do not anticipate that our outstanding interest rate cap agreement will significantly impact interest expense in the immediate near term as interest rates have decreased to a level below the specified SOFR cap.
Removed
For additional information related to the Company’s Credit Facilities, refer to Note 10, “Debt” of the notes to the consolidated financial statements included in this Annual Report.

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