Lumber Liquidators continues fiscal decline
Lumber Liquidators is apparently still hurting from its "60 Minutes" debacle over a year ago: its sales and customer invoices both fell by double-digit rates in the first quarter.
The wider-than-expected decreases amounted to a 10.2% decline in sales to $233.5 million, and a net loss of $32.4 million, or $1.20 a share. Wall Street analysts expected sales of $237.4 million and losses of $0.24.
That's all compared to a net loss of $7.8 million a year ago, and net sales of $260 million.
Meanwhile, comparable store sales declined 13.9% owing to a 13.8% decrease in the number of customers invoiced and a 0.1% decrease in the average sale.
"The company believes net sales were impacted by changes in our promotional strategy and continued negative consumer sentiment regarding us, which was in part a result of heightened negative media coverage during the first quarter associated with certain Chinese laminate product that the company discontinued in May of last year," said Lumber Liquidators in a statement.
The news comes after an agreement the company reached with the State of California Air Resources Board last month to pay a $2.5 million fine.
Additionally, on April 27, Lumber Liquidators entered into a memorandum of understanding ("MOU") with the lead plaintiffs in the consolidated securities class action matter to settle outstanding claims. In short, the company is forking up $26 million, plus 1 million shares of its common stock, as part of the settlement.
"During the first quarter of 2016, we continued to take steps in the right direction for Lumber Liquidators," said CEO John Presley. "Our sales results fell short of our expectations, but we continue to see improvement in our gross margin from the lows of 2015 driven by our strategic pricing initiatives. With the addition of Dennis Knowles to our executive team, we have a dedicated professional leading the customer experience in our stores and are focused on driving top-line improvement."
"We also made progress on several legal and regulatory issues, and while there is still work to do, we believe we have the right team in place to address these challenges. We continued to execute on our plan to strengthen our business, including enhancing compliance and sourcing, as well as improving training for our store associates. Our management team is confident in the potential of our business, and we believe that by continuing to work our plan, we will return Lumber Liquidators to growth and profitability."