Moody's stabilizes Floor & Decor outlook

Moody's Investors Service said it changed Floor and Decor Outlets of America, Inc.'s outlook to stable from positive.

“The change in outlook to stable reflects that depressed existing home sales in the face of higher interest rates increases risk to Floor & Decor's financial performance in 2024. The stable outlook also reflects the company's capex plan will limit the company's ability to generate significant free cash flow. Nonetheless, the company has good liquidity given its $800 million ABL (unrated) which had $697 million of availability at the end of September 2023. Solid returns from its new store builds remains critical as the company experiences weak conditions after a period of outsized growth,” Moody’s said in a press release.

At the same time, Moody's affirmed Floor & Decor's corporate family rating at Ba3, its probability of default rating at Ba3-PD, and its Ba2 senior secured term loan B3 rating. Its speculative grade liquidity rating remains unchanged at SGL-2.

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