Specialty retailer of hardwood flooring,
Lumber Liquidators Holdings, Inc.
) reported third-quarter 2013 earnings per share of 73 cents,
outpacing the Zacks Consensus Estimate of 67 cents and rising
58.7% from 46 cents earned in the year-ago quarter. The growth
was driven by increasing consumer demand due to upsurge in real
Due to higher traffic, net sales rose 24.5% year over year to
$254.3 million and handily beat the Zacks Consensus Estimate of
Comparable-store net sales increased 17.4% mainly owing to 9.8%
rise in customer invoiced and 6.9% growth in average sales. On
the other hand, non-comparable store net sales rose to $14.5
Gross profit rose 36.6% to $106.4 million primarily due to a rise
in net sales, partly offset by higher cost of sales. Lumber
Liquidators' gross profit margin expanded 370 basis points (bps)
Lumber Liquidators' operating income increased about 60.3% to
$33.3 million while operating margin as a percentage of net sales
expanded 290 bps to 13.1%.
However, selling, general and administrative (SG&A) expenses
rose 28% to $73.1 million in the quarter, while SG&A expenses
as a percentage of sales increased 80 bps to 28.8% driven by
efforts to enhance advertising.
Balance Sheet and Cash Flow
Lumber Liquidators ended the quarter with cash and cash
equivalents of $84.2 million compared with $40.1 million at the
end of the year-ago quarter. During the nine months ended Sep 30,
2013, Lumber Liquidators generated $36.7 million in cash from
Capital expenditures for nine months ended Sep 30, 2013 were
$17.3 million, up from $9.6 million in the prior year. The rise
in expenditure was due to procurement of land for the East Coast
distribution facility, store expansion along with remodeling and
investment for safeguarding of the technology systems.
During the quarter, the company bought back 110,000 shares for
about $98 million. Currently, Lumber Liquidators has about $26.9
million worth of shares remaining under its existing share
Lumber Liquidators declared plans to open 10-12 stores in the
fourth quarter and 29-31 stores in 2013. During the quarter, the
company opened 7 stores and remodeled 6 existing outlets.
Considering the year-to-date results, Lumber Liquidators raised
its 2013 net sales to about $985-$995 million, up from the
previous forecast of $940-$963 million. The company now projects
comparable-store sales to increase between 14.0% and 15.0% during
the year, while comps for the fourth quarter are expected in the
range of 9.0%-14.0%.
Further, the company raised its 2013 earnings forecast to
$2.65-$2.74 per share as compared with the earlier guidance of
$2.45-$2.60. The current Zacks Consensus Estimate for 2013 is
pegged at $2.71 per share.
Management now expects additional SG&A expenses in the range
of $1.4-$1.8 million during the fourth quarter, primarily due to
the launch of the West Coast Distribution facility as well as
additional legal and professional fees.
Management expects capital expenditure for the full year in the
band of $35-$40 million.
Lumber Liquidators currently carries a Zacks Rank #2 (Buy). Other
home improvement retailers like
Lowe's Companies Inc.
The Home Depot, Inc.
Builders FirstSource, Inc.
) are expected to report earnings on Nov 20, Nov 19 and Oct 24,
BUILDERS FIRSTS (BLDR): Free Stock Analysis
HOME DEPOT (HD): Free Stock Analysis Report
LUMBER LIQUIDAT (LL): Free Stock Analysis
LOWES COS (LOW): Free Stock Analysis Report
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