Lumber Liquidators Holdings, Inc.
) second-quarter 2014 earnings per share of 60 cents came in line
with the Zacks Consensus Estimate, but fell 17.8% year over year.
Though net sales increased 2.3% year over year to $263.1 million,
it fell short of the Zacks Consensus Estimate of $275 million.
Lumber Liquidators Holdings, Inc - Earnings
Surprise | FindTheBest
Per the company, weaker-than-anticipated traffic coinciding with
macroeconomic headwinds pertaining to residential remodeling
wreaked havoc on its quarterly performance. A dip in demand for
wood flooring and low inventory levels in many of the company's key
merchandise categories, were the main reasons behind the decreased
Comparable-store net sales decreased 7.1%, along with a 5.3%
reduction in number of customers invoiced and 1.8% fall in average
sales. Moreover, sales continued to reel under the after effects of
bad weather. The impact was felt severely across 131 outlets
resulting in a 12.9% decline in comps.
Gross profit remained almost flat at $106.2 million whereas the
gross profit margin shrunk 90 basis points (bps) to 40.4%.
Constrained inventory levels led to an unfavorable sales mix
causing the contraction in margins.
Lumber Liquidators' operating income decreased 17.9% to $27.2
million while operating margin as a percentage of net sales
contracted 260 bps to 10.3%.
Selling, general and administrative (SG&A) expenses rose 8.3%
to $79.1 million in the quarter while SG&A expenses as a
percentage of sales increased 170 bps to 30.1% attributable to
higher legal, professional, occupancy and advertising expenses.
Balance Sheet and Cash Flow
Lumber Liquidators, which competes with Lowe's Companies Inc. (
), The Home Depot Inc. (
) and Builders FirstSource Inc. (
), ended the quarter with cash and cash equivalents of $48.1
million as compared with $80.6 million as of Dec 31, 2013. During
first half, Lumber Liquidators generated $28.1 million in cash from
For the first half, capital expenditures were $28.3 million, up
significantly from $6.8 million recorded in the year ago period.
The rise in expenditure was related to property and equipment for
new distribution centers as well as expansion and remodeling of
Further, Lumber Liquidators' bought back 246,000 shares for $20.7
million in the quarter.
Lumber Liquidators has reiterated its earnings and sales guidance
for 2014, having already lowered its outlook earlier this month.
For 2014, sales are expected to be in the range of $1.05 billion to
$1.10 billion, from the earlier expectation of $1.15 billion to
Comps will be in low single digits (positive or negative) as
against earlier projection of increases in mid to high single
digits. Consequently, earnings per share are now expected to be in
the range of $2.65 to $3.00, down from the earlier projection of
$3.25 to $3.60.
Moreover, Lumber Liquidators has curtailed its expansion plans such
that it now intends to open 33-37 stores as against the previous
expectation of 35-40 stores. Further, remodeling plans have also
been scaled down to include 15-20 stores versus 25-30 outlets
Operating Margin is anticipated in the range of 12.9%-14.5% for the
remaining year. Management expects SG&A expenses to rise within
8%-12% year over year in the second half.
Currently, Lumber Liquidators holds Zacks Rank #5 (Strong Sell),
indicating the disappointing bottom-line performance,
lower-than-expected top-line and cautious outlook.
Want the latest recommendations from Zacks Investment Research?
Today, you can download 7 Best Stocks for the Next 30 Days.
Click to get this free report
LUMBER LIQUIDAT (LL): Free Stock Analysis
HOME DEPOT (HD): Free Stock Analysis Report
LOWES COS (LOW): Free Stock Analysis Report
BUILDERS FIRSTS (BLDR): Free Stock Analysis
To read this article on Zacks.com click here.