Will Small Format Stores In Repurposed Real Estate Return Floor & Decor To Comp Sales Growth?

August 2, 2026 - 03:42

Floor & Decor reported another drop in comparable sales for the second quarter in a row. The 2.1 percent decline in Q2 2026 was actually an improvement over the 3.7 percent drop seen in the first quarter. Still, the company expects comparable sales to stay negative for the rest of the year. The big question is whether 2027 will bring a turnaround.

A stronger housing market would help. But the retailer is also counting on a new wave of smaller stores to change its trajectory. Floor & Decor opened 20 new locations in 2025 and plans another 20 in 2026. These are not the company's typical 80,000 square foot warehouses. The new stores average around 55,000 square feet, and some are even smaller.

The shift is intentional. Floor & Decor is using the compact format to enter secondary markets and fill gaps in dense urban areas. The smaller footprint also cuts costs. Opening a new store in 2026 will cost roughly 7.5 to 8 million dollars, down from about 12 million in 2023. Much of that savings comes from repurposing existing buildings instead of building from scratch.

All five stores opened in the second quarter were in former big box retail spaces. Recent locations include a former Conn's HomePlus in Winston Salem, North Carolina, an old ShopRite grocery store in Cortlandt Manor, New York, and a converted Studio Movie Grill theater in Scottsdale, Arizona. One store in Fayetteville, North Carolina, also took over a former Conn's location. Fayetteville is considered a Tier 3 market with a metro population under 400,000. Other openings, like a store in Staten Island housed in a former Macy's Furniture Gallery, target larger Tier 1 markets.

Repurposed real estate offers clear benefits. Stores open faster and cost less. But there is a catch. Unlike discount retailers such as Burlington or Ollie's Bargain Outlet, which often move into spaces vacated by direct competitors, Floor & Decor is taking over buildings from grocery stores and theaters. Those former tenants did not sell flooring or tile. So while the locations may be solid, they do not come with a built-in customer base or an obvious market share grab.

The real test is whether these smaller, cheaper stores can drive enough new business to push comparable sales back into positive territory. There is also a risk they could cannibalize sales from nearby existing locations and drag down overall store productivity. The next few quarters will show whether the strategy works or backfires.