Lumber Liquidators Holdings Inc Lowers Outlook; Stock Dives

The stock price of Lumber Liquidators Holdings Inc (NYSE:LL) closed $70.42 per share, down by 8% on Wednesday after the company lowered its business outlook for the year due to weak customer traffic.  During the extended hours trading, the shares of the company plummeted over 18% to $57.29 a share.

Lumber Liquidators issued earnings warning

Lumber Liquidators Holdings Inc (NYSE:LL) issued a warning for its financial results for the second quarter ended June 30 and full year 2014.

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The company said its net sales for the second quarter increased 2.3% to $263.1 million, but its comparable stores dropped 7.1%.  Its gross margin for the quarter is also expected to fall.

Lumber Liquidators Holdings Inc (NYSE:LL) expected its earnings to decline in the range of $0.59 to $0.61 per diluted share. During the same period a year earlier, the company posted earnings of $0.73 per diluted share.

In a statement, Robert M. Lynch, president and CEO of Lumber Liquidators Holdings Inc (NYSE:LL) said, “Customer traffic to our stores was significantly weaker than we expected, particularly in geographic areas severely impacted by an unusually harsh weather in the first quarter.  The improvement in customer demand we experienced beginning in mid-March did not carry into May, and June weakened further.

Lumber Liquidators fiscal 2014 outlook

For the fiscal 2014, Lumber Liquidators Holdings Inc (NYSE:LL) estimated to achieve earnings in the range of $2.65 to $3.00 per diluted share, down from its previous guidance between $3.25 and $3.60 per diluted share.

The company estimated that its net sales would be in the range of $1.05 billion to $1.10 billion, down from its previous forecast of around $1.15 billion to $1.20 billion.

Analysts polled by FactSet estimated that Lumber Liquidators Holdings Inc (NYSE:LL) will be able to generate $3.33 in earnings per diluted share and $1.16 billion in revenue for the full year.

“Though we continue to believe we are early in a multi-year housing recovery that will drive home improvement spending; a number of the factors weighing on our second quarter results are likely to continue in the second half of 2014.”

In addition, Lynch expressed confidence in the long-term strength of the business model of Lumber Liquidators Holdings Inc (NYSE:LL). He also believed that the company investments in its strategic initiatives will continue to take market share gains in the future.

Tilson cheered Lumber Liquidator’s stock decline

Whitney Tilson of Kase Capital cheered the decline of the stock price of Lumber Liquidators Holdings Inc (NYSE:LL), one of his largest short positions. In an e-mail sent to ValueWalk, Tilson wrote, “Another day, another retailer bites the dust.”