8 High Growth Retail Stocks That Are Profitable in 2024

6. Floor & Decor Holdings, Inc. (NYSE:FND)

5-Year Net Income Growth: 12.04%

5-Year Revenue Growth: 18.59%

TTM Net Income: $209.7 million 

Number of Hedge Funds as of Q2 2024: 34

Floor & Decor Holdings, Inc. (NYSE:FND) is a multi-channel specialty retailer that sells hard surface flooring, related accessories, and commercial surfaces. It operates five design studios and around 230 warehouse-format stores across 36 states. Its offerings are for commercial businesses, professional installers, as well as do-it-yourself (DIY) and buy-it-yoursef (BIY) homeowners.

With housing affordability remaining a hurdle for most buyers due to record-high home prices and increased mortgage rates, the company is not seeing the resurgence in hard surface flooring demand that it had expected. However, it realizes the short-term challenges posed by the current market conditions and is thus adapting its strategies accordingly. It is committed to executing strategies to grow its market share, and is working to maintain a strong balance sheet and improve its profitability.

The company opened five new warehouse-format stores in Q2 2024, ending with five design studios and 230 warehouse stores, compared to five design studios and 203 warehouse stores in the same period last year. It plans to open 30 new warehouse stores for the full fiscal year 2024, compared to its prior expectation of opening 30-35 stores.

Floor & Decor Holdings, Inc. (NYSE:FND) believes that slowing its new store opening pace to around 25 new warehouse stores by fiscal 2025 is prudent, considering current market conditions. It is pivoting most of its store expansion to larger existing markets with higher brand awareness.

Its fiscal 2025 plans include focusing on opening warehouse stores with the highest potential for success in this weak environment, thereby maximizing its return on capital. It is using this period as an opportunity to align capital spending growth and sales projections with the current environment. These initiatives have allowed the company to slash its fiscal 2025 capital investment per new store and increase the expected return for this store class by more than 200 basis points.

Madison Mid Cap Fund stated the following regarding Floor & Decor Holdings, Inc. (NYSE:FND) in its Q3 2024 investor letter:

“The top five contributors for the quarter were Liberty Broadband, Floor & Decor Holdings, Inc. (NYSE:FND), Moelis, Brown & Brown, and Waters. Floor & Décor continues to face a challenged sales environment, given a weakening consumer and housing market. However, potentially positive implications from lower interest rates and market share gains from a large competitor closing stores has investors more optimistic that results will improve.”