Lumber Liquidators Holdings Inc (NYSE:LL) disappointed investors as its loss for the fourth quarter was wider than expected amidst a significant drop in the revenues. The company’s results were unfavorably affected by allegations on the quality of its laminates that were sourced from China.
Lumber Liquidators suffered a net loss of $19.8 million or a loss of 73 cents a share in the fourth quarter. In comparison, the company earned a net income of $17.3 million or earnings of 64 cents a share in the same quarter last year. Though analysts predicted a loss, their estimation was only a loss of 20 cents a share. Performance fell short by a wide margin. Of course, in the previous four quarters, its negative surprise percentage ranged between 15.8% and 1,350%, making the company very volatile and unpredictable.
Lumber Liquidators’ net sales fell 13.7% to $234.8 million, which included a fall of 17.2% in comparable store sales. Street analysts expected revenue of $254.46 million for a 6.4% YoY fall. The company blamed the weak numbers on customers’ invoices, which witnessed a 15.6% drop, while average sales fell 1.6% in the comparable period. One bright spot is that the company unveiled five new stores in the fourth quarter. As a result, non-comparable store net sales advanced $9.6 million from the preceding year quarter.
Margins Under Pressure
Lumber Liquidators reported a gross margin of 23.0%, which was sharply down from 39.2% recorded in the preceding year. The company said that the fall was mainly due to a $22.2 million drop in the carrying value of its current inventory of laminate flooring, which was sourced from China.
While revenue dipped, Lumber Liquidators witnessed a 9.9% increase in selling, general and administrative expenses to $85.5 million. As a result, its percentage of total revenue increased to 36.4% from 28.6%. The company blamed it on some legal and professional expenses. The firm closed the quarter with cash and cash equivalents of $26.7 million.