Lumber Liquidators Holdings Inc (NYSE:LL) released its latest earnings report before opening bell this morning, posting losses of 73 cents per share on $234.8 million, compared to the Wall Street estimates of 20 cents per share in losses and $254 million, representing a 14% year over year decline. In the year-ago quarter, the retail chain posted earnings of 64 cents per share.
Lumber Liquidators’ same store sales plunge
Lumber Liquidators Holdings Inc (NYSE:LL) said same store sales fell 17.2% year over year on the back of continued problems from the allegations about formaldehyde levels in its Chinese-made laminate flooring. The retailer said most of the decline in same store sales was the result of a 15.6% decline in the number of invoiced customers. It also recorded a 1.6% decline in the size of the average sale.
The company said it expects sales to continue being negatively impacted by the allegations surrounding the Chinese-made flooring products it sold previously. Non-comparable store sales climbed $9.6 million net year over year as the retailer opened five new stores during the quarter.
Allegations about some flooring products continue
Lumber Liquidators’ gross margin fell from 39.2% in the fourth quarter of 2014 to 23% in the fourth quarter of 2015. The retail chain said most of that decline was the result of a $22.2 million reduction in the “carrying value” of its current Chinese-made laminate flooring inventory and related moldings. The company said it decided during the quarter that it wouldn’t sell these products due to “strategic and operational considerations including potential distraction these products could have on our employees and our business.”
Last week Lumber Liquidators took a hit after the Centers for Disease Control corrected its previous report to say that the formaldehyde levels it tested in some of the retailer’s laminate flooring products were actually higher than previously reported.
Lumber Liquidators names new COO
Also this morning, Lumber Liquidators named Dennis Knowles as chief operating officer. He comes to the embattled flooring retailer from Lowe’s, where he was chief store operations officer.
Shares of Lumber Liquidators pulled back in premarket trading. Shares fell by as much as 1% before rebounding. As of this writing, the stock is down 0.63% at $11.05 per share.