We delivered strong second quarter sales and profitability growth, with comp sales up 31.3% versus last year and up 10% on a two-year stack basis.
Second quarter operating margin of 5.5% was up 290 basis points versus the second quarter of last year and up 600 basis points on a two-year basis.
On an adjusted basis, operating margin of 5.6% increased 280 and 440 basis points respectively versus the second quarter of '20 and 2019.
We were pleased to report diluted earnings per share of $0.41, which was up $0.32 versus 2020 and up $0.51 versus 2019.
Adjusted earnings per diluted share of $0.41 was up $0.31 versus 2020 and up $0.38 versus 2019.
In addition to our success with pros, our second quarter results were driven by a 107% increase in net services sales, which are largely comprised of installation sales.
On a two-year basis, net service sales were up 10%, demonstrating the benefit from our investments in improving the installation customer experience.
We now offer more than 500 flooring SKUs that customers can easily discover through our e-commerce site including a completely virtual online experience or in our stores.
During the second quarter, our web sales were down 32% versus the second quarter of last year when COVID shutdowns were at the peak.
But were up over 140% on a two-year stack basis.
During the second quarter, we opened four new stores bringing our total store count to 416 at the end of June.
Including the three showroom-only locations, we are on track to open 12 to 15 new stores in 2021.
In June, the inventory of existing home sales to sale was $125 million representing a 2.6-month supply, which was a slight improvement from May.
In addition, consistent with our strategy of being a leader in delivering a trend right assortment, we currently offer over 500 SKUs, and we'll continue to introduce new and innovative products sourced from across the world to help satisfy demand.
In the second quarter, net sales of $301.4 million increased $71.1 million or 30.9% versus the second quarter of 2020 due to a 23.6% increase in net merchandise sales and 106.8% increase in net service sales.
We saw a 29.4% increase in our average ticket reflecting a greater mix of installation sales as well as higher merchandise average ticket and a 2% increase in transaction count compared to the same period in 2020.
When comparing to the second quarter of 2019, net sales increased 4.4% driven by 3.5% higher merchandise sales, and 10.4% higher net service sales.
Average ticket improved 11.3% and transactions were down 1.3%.
As Charles noted, second quarter 2021 comparable store sales increased 31.3% versus the second quarter of 2020 and 10% on a two-year stack basis.
Gross profit increased 27.7% in the second quarter of 2021 to $112.7 million from $88.3 million in the comparable period of 2020, an increase to 10% from $102.5 million in the second quarter of 2019.
Gross margin of 37.4% in the second quarter of 2021 compared to 38.3% in the second quarter of 2020 and 35.5% in the second quarter of 2019.
The 90 basis point decrease in gross margin versus last year primarily reflects higher tariffs on certain goods imported from China, and higher materials and inbound transportation costs, which were partially offset by pricing, promotions and sourcing strategies.
The second quarter of 2021 and 2020 had no non-GAAP adjustments to gross margin.
During the second quarter of 2019, gross margin included a $780,000 favorable adjustment for HTF duty categorization in prior periods.
When excluding that adjustment, gross margin was 35.2% for the second quarter of 2019.
The 220 basis point improvement in the second quarter of 2021 adjusted gross margin versus 2019 is particularly impressive given that the cost of merchandise sold on certain products imported from China included 25% tariff rates in the second quarter of 2021 compared to only 10% in the second quarter of 2019.
SG&A expense for the second quarter with $96.1 million or 31.9% of sales leveraging 380 basis points compared to $82.3 million or 35.7% of sales in the second quarter of 2020.
SG&A expense for the second quarter of 2019 was $103.9 million or 36% of sales.
When excluding these items from all periods, adjusted SG&A expense for the second quarter of 2021 was $95.8 million compared to $81.8 million in 2020 and $98.1 million in 2019.
As a percent of sales, adjusted SG&A of 31.8% improved 370 basis points from 35.5% of sales in the second quarter of 2020 and improved 220 basis points from 34% of sales in the second quarter of 2019.
For the second quarter of 2021, we delivered operating income of $16.6 million, an increase of $10.6 million compared to $6 million in the second quarter of 2020 and an operating loss of $1.4 million in the second quarter of 2019.
Adjusted operating income in the second quarter of 2021 was $16.9 million, up $10.4 million from $6.5 million for the prior year period and up $13.3 million from 2019.
Adjusted operating margin for the second quarter of 2021 was 5.6%, up 280 basis points from 2.8% in the second quarter of 2020 and up 440 basis points from 1.2% in 2019.
In the second quarter of 2021, we reported other expenses of $490,000 compared to other expense of $1.1 million for the three months ended June 30, 2020.
The decrease of $600,000 was driven by lower interest and fees on our credit agreement due to the amendment in April 2021 and the paying down of our outstanding debt during the second quarter of 2021.
In the second quarter of 2021, we recognized income tax expense of $4.1 million or an effective tax rate of 25.6% compared to income tax expense of $2.2 million or an effective tax rate of 45.7% for the second quarter of 2020.
For the second quarter of 2021, net income increased by $9.4 million to $12 million compared to net income of $2.6 million for the second quarter of 2020.
We reported a net loss of $2.9 million in 2019.
Adjusted earnings for the second quarter of 2021 were $12.2 million compared to adjusted earnings of $3 million for the second quarter of 2020 and $820,000 in 2019.
Finally, earnings per diluted share were $0.41 for the quarter versus earnings per diluted share of $0.09 in the year ago quarter and a loss of $0.10 in 2019.
On an adjusted basis, second quarter earnings per diluted share of $0.41 compared to adjusted earnings of $0.10 for the second quarter of 2020 and adjusted earnings of $0.03 in 2019.
Inventory at the end of the second quarter was $224 million compared to $225 million at the end of March 2021 and $249 million at the end of June 2020.
The 10% year-over-year reduction in inventory was primarily driven by supply chain constraints on replenishment and strong sales that kept inventory below our targeted level.
We ended the quarter with cash and cash equivalents of $112 million compared to $170 million as of December 2020.
During the second quarter, we repaid all $101 million of our outstanding credit facility debt consistent with the plans we shared on our last call.
Net cash provided by operating activities was $53 million for the six months ended June 30, 2021 primarily due to positive changes in working capital reflecting continued inventory supply constraints as well as $23 million of net income.
As of June 30, 2021, we had $241 million of liquidity comprised of $112 million of cash and cash equivalents, and $129 million of excess availability under the credit agreement.
This represents an increase in liquidity of $55 million from June 30, 2020.
That said, given the combination of increasingly challenging supply chain constraints on inventory replenishment, potential consumer demand shift and the potential impact of the COVID-19 delta variant, we believe it is prudent to plan for slowing comparable sales on a two-year stack basis for the second half of 2021 compared to the 10% we delivered in the second quarter.
We still expect CapEx investments of approximately $24 million to $28 million in 2021 primarily for the broad scale rebranding of our stores, the opening of 12 to 15 new stores, and investments in digital.

Summary:
We delivered strong second quarter sales and profitability growth, with comp sales up 31.3% versus last year and up 10% on a two-year stack basis.
We were pleased to report diluted earnings per share of $0.41, which was up $0.32 versus 2020 and up $0.51 versus 2019.
Adjusted earnings per diluted share of $0.41 was up $0.31 versus 2020 and up $0.38 versus 2019.
On a two-year basis, net service sales were up 10%, demonstrating the benefit from our investments in improving the installation customer experience.
During the second quarter, we opened four new stores bringing our total store count to 416 at the end of June.
In the second quarter, net sales of $301.4 million increased $71.1 million or 30.9% versus the second quarter of 2020 due to a 23.6% increase in net merchandise sales and 106.8% increase in net service sales.
As Charles noted, second quarter 2021 comparable store sales increased 31.3% versus the second quarter of 2020 and 10% on a two-year stack basis.
Gross profit increased 27.7% in the second quarter of 2021 to $112.7 million from $88.3 million in the comparable period of 2020, an increase to 10% from $102.5 million in the second quarter of 2019.
The second quarter of 2021 and 2020 had no non-GAAP adjustments to gross margin.
The 220 basis point improvement in the second quarter of 2021 adjusted gross margin versus 2019 is particularly impressive given that the cost of merchandise sold on certain products imported from China included 25% tariff rates in the second quarter of 2021 compared to only 10% in the second quarter of 2019.
Finally, earnings per diluted share were $0.41 for the quarter versus earnings per diluted share of $0.09 in the year ago quarter and a loss of $0.10 in 2019.
On an adjusted basis, second quarter earnings per diluted share of $0.41 compared to adjusted earnings of $0.10 for the second quarter of 2020 and adjusted earnings of $0.03 in 2019.
The 10% year-over-year reduction in inventory was primarily driven by supply chain constraints on replenishment and strong sales that kept inventory below our targeted level.
That said, given the combination of increasingly challenging supply chain constraints on inventory replenishment, potential consumer demand shift and the potential impact of the COVID-19 delta variant, we believe it is prudent to plan for slowing comparable sales on a two-year stack basis for the second half of 2021 compared to the 10% we delivered in the second quarter.