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  "documentTitle": "Floor & Decor Holdings, Inc. (FND)",
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  "authorName": "Spruce Point Capital Management",
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  "presentationDate": "2024-07-01 00:00:00",
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  "notes": "The slide uses a 'myth vs. reality' structure to dismantle the bull case for FND.",
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      "text": "We Have Identified At Least 10 Reasons Why Floor & Decor's Strategy Is Struggling",
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      "text": "1) Competitive advantage in its large store size format and broad SKU assortment\n2) Product differentiation, pricing power, and makes money in all categories\n3) Substantial adjacent product category opportunities\n4) Supply chain advantages and superior inventory management\n5) Sustainable visualization technology, design studio, designer services, and marketing advantages\n6) No increased competition from distributors\n7) No increased competitive threats from Lowe's and Home Depot\n8) Homeowners as stable and core customers who drive fast growing and high margin installation services\n9) No increased unsecured credit risk to weaker commercial customers to boost sales\n10) No greater labor pressures than its peers and is not experiencing any customer service issues",
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      "text": "We believe FND's guidance toward smaller store openings is a tacit admission that the large store format isn't working. At existing stores, FND has markedly shrank workers per store, which we believe is increasing customer service challenges. Meanwhile, its wage costs have grown 3-4% faster than Home Depot and Lowe's. Many of FND's recent material growth drivers have fizzled. For example, FND claimed that rigid core luxury vinyl plank (\"LVP\") was its hottest product and highest ticket growing from 12% to 28% of sales. FND no longer calls out the category growth, but last referenced that it continued to take share from wood. We believe a major producer of LVP is Asian-based Novalis which recently expanded production into the U.S. with a new facility. FND has not disclosed that it has exclusive or long-dated relationships with suppliers that would prevent others from purchasing from Novalis. Further, FND recently retracted a key supply chain claim and has not broadened its total vendor relationships in over 3 years. Sourcing and moving product is difficult given import requirements and because tiles are heavy and costly to transport. FND's percent of revenue from homeowners is down sharply from 70% to 55% from 2020-2023. Homeowners have historically driven fast growing and higher margin installation products and services.",
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      "text": "Multiple Pressures Face Floor & Decor",
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