Severe winter marred
Lumber Liquidators Holdings, Inc.
) first-quarter 2014 results. The quarterly earnings per share of
49 cents lagged the Zacks Consensus Estimate by 22.2% and fell
14.0% year over year.
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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Net sales rose 6.9% year over year to $246.3 million but fell
short of the Zacks Consensus Estimate of $263 million. As per the
company, adverse weather condition impacted sales across 135
outlets out of 331 outlets. The stores impacted by weather
reported a decline of 3.8% in sales whereas the remaining stores
reported a 14.6% rise in net sales.
Comparable-store net sales decreased 0.6%, comprising a decline
of 13.1% in weather-impacted outlets and an increase of 8.5% in
the remaining outlets.
Gross profit rose 8.9% to $101.3 million primarily due to a rise
in net sales, partly offset by higher cost of sales. Gross profit
margin expanded 70 basis points (bps) to 41.1% on the back of
increase in net product margin and reduced product costs, partly
offset by rise in transportation costs.
Lumber Liquidators' operating income decreased about 11.8% to
$22.4 million while operating margin as a percentage of net sales
shriveled 190 bps to 9.1%.
Selling, general and administrative (SG&A) expenses rose
16.7% to $78.9 million in the quarter while SG&A expenses as
a percentage of sales increased 270 bps to 32.0%. The increase in
these expenses was owing to the setup of the West Coast
distribution center and higher legal and professional fees.
Balance Sheet and Cash Flow
Lumber Liquidators, which competes with
Lowe's Companies Inc.
The Home Depot Inc.
Builders FirstSource Inc.
), ended the quarter with cash and cash equivalents of $76.1
million as compared with $72.7 million at the end of the year-ago
quarter. During first-quarter of 2014, Lumber Liquidators
generated $22.3 million in cash from operations.
Capital expenditures were $14.4 million, up significantly from
$2.6 million in the prior year. The rise in expenditure was
related to property and equipment for new distribution centers as
well as expansion and remodeling of stores.
In addition, Lumber Liquidators' bought back 168,000 shares for
$16.7 million in the quarter.
During the quarter, the company opened 13 stores while it
unveiled 30 stores in 2013. It remodeled 5 existing outlets
in the quarter. Lumber Liquidators declared plans to open 35-40
stores and remodel 25-30 outlets in 2014.
Lumber Liquidators has reiterated its earnings and sales guidance
for 2014. The company continues to expect net sales in the range
of $1.15-$1.20 billion in 2014. Further, the company anticipates
2014 earnings in the band of $3.25-$3.60 per share. The current
Zacks Consensus Estimate for 2014 is pegged at $3.50 per share.
Operating Margin is anticipated in the range of 13.0%-13.8% for
the full year.
Management expects additional SG&A expenses from the launch
and continuation of the West Coast Distribution facility, store
expansion, advertising expenses as well as additional legal and
Moreover, the company expects capital expenditure for the full
year in the band of $80-$90 million, with nearly $50 million
diverted for supply chain investments.
However, the company projects comps growth in the mid to high
single digit range during the year, up from the earlier range of
high single to low double-digit range.
Currently, Lumber Liquidators carries a Zacks Rank #4 (Sell).