This is an excerpt from our second Speedwell Research piece, which goes over Floor & Decor’s early history. It is just the beginning (<2 pages) of our ~14k word deep dive (50+ pages). We hope you enjoy it! Please email us at info@speedwellresearch.com for any questions, concerns, or comments. See our full disclaimer on our website.
Business History.
Floor & Decor was founded in 2000 by George Vincent West in Atlanta, Georgia. A glassware salesman before joining his family’s business, West Building Materials, George West thought there was an opportunity for a discounted flooring reseller of closed out products. However, when he couldn’t find his wife the specific flooring she wanted, he decided instead that there should be a hard surface flooring specialty store that had a much wider selection than what a customer could typically expect to find at a home improvement center. In order to hold all of the extra SKUs and inventory, the store had to be larger than the typical mom & pop flooring store and specialized in nothing but hard surface flooring. Just two years after opening their first store, Floor & Decor was bought out by a group of investors who saw promise in growing it into a bigger chain. They would continue to grow store count up to ~25 in 2010, when they were sold again. This time, the buyers were large private equity funds, Ares and Freeman Spogli & Co.
In 2012, the new private equity owners installed Tom Taylor at the helm as CEO. Taylor had started his career at Home Depot at the age 16, where he worked his way up to becoming Home Depot’s youngest store manager at the age 22 and was ultimately promoted up to Executive Vice President of Operations. After a 23-year tenure at Home Depot, he spent several years at Sun Capital Partners as a managing director responsible for over 20 portfolio companies. With intimate operating experience in the home improvement space, bolstered by a deeper financial sense from his time overseeing many companies, he was the perfect fit for Floor & Decor. He doubled the store footprint while tripling sales to just over $1bn by 2016 year-end.
With Floor & Decor’s private equity owners in need of a liquidity event and the specialty chain showing moderate profits of $43mn for 2016, they IPOed on the NYSE in 2017. On April 27th, 2017, Floor & Decor listed on the NYSE as FND, selling 8.8mn shares at $21 each to raise a total of ~$185mn. Their original offering price valued the company at ~$1.7bn, but after a nice IPO pop, that figure increased over 50% to~$2.7bn just a day after going public.
Today, Floor & Decor operates over 170 stores and generated over $3.4bn in revenues for 2021 with almost ~$300mn in profits. They have a market cap just under ~$8bn (even after the market cut their valuation almost in half YTD). Despite their stellar growth over the past 2 decades, this story is still in its early innings with FND planning on more than doubling their footprint and taking market share from peers to become the indisputable leader in the hard surface flooring market.
We will now start our analysis with a high-level overview of the business and their core products before going into their operating model.
This concludes the “Business History” section of our report. In the next section, we dive deep into their actual business, followed by their Operating Model, Industry & Market, Competitors, Store Economics, Valuation, Risks, and much more. See below for the full table of contents, and subscribe to get access to the full ~14k word Floor & Decor deep dive!
Table of Contents
- Business History.
- Business.
- Operating Model.
- Industry and Market.
- Competitors.
- The Home Depot.
- Lowe’s.
- LL Flooring.
- The Tile Shop.
- Other Competition.
- Peer Metrics.
- Store Economics.
- ROIC.
- Management and Incentives.
- Valuation.
- Risks.
- Summary Model.
- Conclusion.
To read the full report, you can subscribe (or purchase an individual copy of the report) here:
Or if you’re not quite ready to read the full report, drop your email below for free updates.