Lumber Liquidators released its latest earnings report before closing bell this morning, posting adjusted losses of 45 cents per share on $238.1 million in sales. Analysts had been expecting the flooring retailer to report losses of 25 cents per share on $240.52 million in revenue. In last year’s second quarter, the company posted losses of 75 cents per share on $247.9 million in sales.
Lumber Liquidators’ comparable store sales still falling
Lumber Liquidators said net comparable store sales fell 7.2% year over year, representing an increase of 0.7% in the size of the average sale. However, the number of customers who were invoiced during the second quarter plunged 7.9% as the flooring retailer continued to deal with fallout from allegations about formaldehyde content in some of the Chinese-made laminate flooring products it no longer sells.
The retailer believes that a change in its promotional strategy from last year’s “very promotional period” to a “more strategic pricing approach” weighed on the number of customers invoiced in this year’s second quarter. The company’s gross margin grew to 29.7% from 25.1% last year.
Lumber Liquidators deals with regulatory issues
“While our financial results this quarter were below our expectations, we are encouraged by the progress we made in strengthening Lumber Liquidators for growth and profitability in the long term,” said Lumber Liquidators CEO John Presley in a statement. “We resolved several legacy regulatory issues, made good progress on resolving certain other outstanding legal matters, and continued to enhance our compliance program. We have also taken significant steps to improve store performance, ensuring our sites are equipped with the right people and products to serve our customers.”
Last month a court upheld a positive ruling of the Proposition 65 lawsuit the company has been dealing with. It also reached an agreement with the Consumer Product Safety Commission in connection with the China-sourced laminate products that have been causing it problems. Lumber Liquidators agreed to continue its indoor air testing program, among other conditions.
Shares of Lumber Liquidators slipped by as much as 4.18% to $16.27 in premarket trading following this morning’s earnings release.