FND

Spruce Point Capital believes Floor & Decor's strategy is struggling and its challenges are intensifying due to ballooning capital expenditures from new store openings, increasing competition, and worsening customer demographics. They estimate a 40% to 60% downside risk, citing concerns about the company's growth strategy, potential tariff impacts, recent changes in disclosures and accounting, and the board's ability to safeguard shareholder interests.

Floor & Decor is the third-largest hard surface floor retailer in the United States, with about 9% market share. The company’s two larger competitors – Home Depot (NYSE: HD) and Lowe’s (NYSE: LOW) – are more general hardware stores, and that may be where the opportunity lies for Floor & Decor. By offering a greater range and stocking more inventory, the author believes Floor & Decor can increase its market share into double-digits.