Lumber Liquidators Provides Second Quarter 2014 Business Update And Revises
Outlook For Full Year 2014
TOANO, Va., July 9, 2014
TOANO, Va., July 9, 2014 /PRNewswire/ --Lumber Liquidators (NYSE: LL), the
largest specialty retailer of hardwood flooring in North America, today
provided a business update for the second quarter ended June 30, 2014, and
revised its outlook for 2014.
Net sales in the second quarter of 2014 increased 2.3% to $263.1 million, from
$257.1 million in the second quarter of 2013. At comparable stores, net sales
decreased 7.1% for the quarter, in comparison to an increase of 14.9% for the
second quarter of the prior year. The Company operated 344 stores at June 30,
2014, including 13 new stores opened during the second quarter, up from 300 at
June 30, 2013.
Gross margin in the second quarter of 2014 is expected to contract in
comparison to the second quarter of 2013 due primarily to adverse net shifts
in sales mix and greater discounting at the point of sale. Selling, general
and administrative expenses are expected to be approximately 9.0% higher than
the second quarter of 2013 primarily due to higher advertising, occupancy,
legal and professional expenses. The Company anticipates second quarter 2014
earnings per diluted share will be in the range of $0.59 to $0.61, compared to
earnings per diluted share of $0.73 in the second quarter of the prior year.
Robert M. Lynch, President and Chief Executive Officer, commented, "Customer
traffic to our stores was significantly weaker than we expected, particularly
in geographic areas severely impacted by the 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. Our reduced
customer traffic has coincided with certain weak macroeconomic trends related
to residential remodeling, including existing home sales, which have generally
been lower in 2014 than the corresponding periods in 2013. We now believe the
prolonged purchase cycle associated with our customers' discretionary,
large-ticket home improvement projects is likely to be delayed for some
customers into the fall flooring season, and for others, into spring of
Mr. Lynch continued, "In certain key merchandise categories, primarily
laminates, vinyl plank and engineered hardwoods, lower than planned inventory
levels reduced our ability to convert customer interest into invoiced sales.
Certain mills experienced production delays in meeting our open orders as we
continued to enhance our quality assurance requirements. We estimate an
aggregate net sales shortfall in the second quarter of up to $18 million in
those products impacted. We expect full product availability for our
customers during the third quarter, with no material impact to our product
Based on year-to-date results and current trends, the Company has updated its
outlook for the full year 2014 and now expects the following:
oNet sales in the range of $1.05 billion to $1.10 billion, from the
previous range of $1.15 billion to $1.20 billion.
oChange in comparable store net sales in the low single digits, either
positive or negative, from the previous increase ranging from mid to high
oThe opening of a total of 33 to 37 new store locations in the expanded
showroom format, from the previous range of 35 to 40 new store locations.
oEarnings per diluted share in the range of $2.65 to $3.00 based on a
diluted share count of 27.6 million shares, which is exclusive of any
future impact of the stock repurchase program, from a previous range of
$3.25 to $3.60.
Mr. Lynch concluded, "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. We are focused on continuous improvement
in our operations, strengthening our leadership in product price and quality
and elevating customer recognition of our superior value proposition. While
we believe the third quarter may be weaker than we originally anticipated, we
have a strong sense of urgency and we expect to regain traction to deliver
operating margin expansion in the second half and in coming years. We remain
confident in the long-term strength of our business model and believe that the
investments we have made in our strategic initiatives will continue to drive
market share gains in the future."
Today's Conference Call and Webcast Information
The Company plans to host a conference call and audio webcast on July 9, 2014,
at 5:00 p.m. Eastern Time. The conference call may be accessed by dialing
(877) 407-9039 or (201) 689-8470. A replay will be available approximately
two hours after the call through July 16, 2014 and may be accessed by dialing
(877) 870-5176 or (858) 384-5517 and entering conference ID number 13586407.
The live conference call and replay can also be accessed via audio webcast at
the Investor Relations section of the Company's website,
Full Second Quarter Results Conference Call and Webcast Information
The Company plans to release its full second quarter results on Wednesday,
July 30, 2014. The Company plans to host a conference call and audio webcast
at 10:00 a.m. Eastern Time on that date. The conference call may be accessed
by dialing (877) 407-9039 or (201) 689-8470. A replay will be available
approximately two hours after the call through August 6, 2014 and may be
accessed by dialing (877) 870-5176 or (858) 384-5517 and entering conference
ID number 13585249. The live conference call and replay can also be accessed
via audio webcast at the Investor Relations section of the Company's website,
About Lumber Liquidators
In its 20th year and withmore than340 locations, Lumber Liquidators is North
America's largest specialty retailer of hardwood flooring. Lumber Liquidators
features more than 350top quality flooring varieties, including solid and
engineered hardwood, bamboo, cork, laminate and resilient vinyl.
Additionally, Lumber Liquidators provides a wide selection of flooring
enhancements and accessories to complement, install and maintain your new
floor. Every location is staffed with flooring experts who can provide advice
and useful information about Lumber Liquidators' low priced product, much of
which is in-stock and ready for delivery.
Withpremierbrands including Bellawood Prefinished Hardwood and Morning Star
Bamboo, Lumber Liquidators' flooring is often featured on popular television
shows such as HGTV's Dream Home and This Old House.
For more information, please visitwww.LumberLiquidators.comor call
1.800.HARDWOOD. You can also follow the company onFacebookandTwitter,and
learn more about its corporate giving program
This press release and accompanying financial tables may contain
"forward-looking statements" as defined in the Private Securities Litigation
Reform Act. These statements are based on currently available information as
of the date of such statements and are subject to risks and uncertainties that
may cause actual results to differ. The Company specifically disclaims any
obligation to update these statements which speak only as of their respective
dates, except as may be required under the federal securities laws.
Information regarding these additional risks and uncertainties is contained in
the Company's filings with the Securities and Exchange Commission.
For further information contact:
Tel: (757) 566-7512
Lumber Liquidators Holdings,Inc.
Other Supporting Schedules
Lumber Liquidators sells its products and services principally to existing
homeowners, or a contractor on behalf of a homeowner. A flooring purchase is
generally a large-ticket, discretionary purchase that most residential
homeowners make infrequently. The Company's research indicates that its
customers will often choose to replace their flooring after they have lived in
their home for a certain number of years, when a life event occurs such as a
change in household members, and/or prior to or shortly after moving into a
new home. The Company believes that due to the average size of the sale and
the general infrequency of a hardwood flooring purchase, many of its customers
conduct extensive research using multiple channels before making a purchase
decision. Further, its research indicates that the average length for a
hardwood flooring purchase, from initial interest to sale, is approximately
100 days. Lumber Liquidators has an integrated multi-channel sales model that
enables its stores, call center, website and catalogs to work together in a
coordinated manner. Though its customers utilize a range of these services in
the decision process, the final sale is most often completed in the store,
working with a flooring expert.
The table below reflects segregation of total second quarter 2014 net sales
and the percentage change in comparison to the second quarter of 2013 into
those stores the Company believes were impacted by weather or Hurricane Sandy
from all other stores:
Three Months Ended June 30, 2014
All Stores All Other Significantly Hurricane
Stores Impacted by Sandy Stores^2
Number of stores 344 206 131 7
at June 30, 2014
Net sales $ $ $ 93,176 $ 6,027
increase 2.3% 5.5% 0.4% (32.5)%
Net sales (7.1)% (2.1)% (12.9)% (32.5)%
Customers (5.3)% (1.9)% (9.6)% (25.7)%
Average sale^5 (1.8)% (0.2)% (3.3)% (6.8)%
^1 Segregation of those stores the Company believes were significantly
impacted by the unusually severe weather is consistent with that presented in
the first quarter of 2014, except that those stores impacted by Hurricane
Sandy are further segregated.
^2 Includes store locations serving communities that were impacted by
Hurricane Sandy and benefited net sales from the fourth quarter of 2012
through the third quarter of 2013. In the second quarter of 2013, these stores
benefited comparable store net sales by 65 to 75 basis points.
^3A store is generally considered comparable on the first day of the
thirteenth full calendar month after opening.
^4 Change in number of customers invoiced is calculated by applying our
average sale to total net sales at comparable stores.
^5Average sale, calculated on a total company basis, is defined as the average
invoiced sale per customer, measured on a monthly basis and excluding
transactions of less than $250 (which are generally sample orders, or add-ons
or fill-ins to previous orders) and of more than $30,000 (which are usually
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SOURCE Lumber Liquidators
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