TOANO, VA - Hardwood flooring firm Lumber Liquidators (NYSE: LL) said cold weather hurt its sales more than expected, as same-store sales fell more than 7%.
An inventory shortage after shipping delays by laminate and engineered wood flooring mills also are to blame, according to CEO Robert Lynch.
Lumber Liquidators took the unusual step of previewing its second quarter earnings, which will be formally announced at the end of July. The flooring retailer and manufacturer also revised downward its outlook for 2014.
Lumber Liquidators stock price has been particularly volatile in recent weeks, as analysts speculated variously that the flooring firm was losing market share to Home Depot, or that it would be acquired by Lowe's - apparently not true.
Net sales in the second quarter of 2014 increased 2.3% to $263.1 million, but that includes new stores opening. At comparable stores, net sales decreased 7.1% for the quarter; a year ago they rose 14.1%.
"Customer traffic to our stores was significantly weaker than we expected, particularly in geographic areas severely impacted by the unusually harsh weather," Lynch said.
"The improvement in customer demand we experienced beginning in mid-March did not carry into May, and June weakened further." Lynch says existing home sales, which drives remodelers to buy Lumber Liquidators flooring, have generally been lower than 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 2015," Lynch said.
Inventory of laminates, vinyl plank and engineered hardwood flooring was lower than Lumber Liquidators planned, so sales couldn't be closed, possibly tied to efforts by Lumber Liquidators to improve safeguards on imported flooring to avoid buying protected species.
"Certain mills experienced production delays in meeting our open orders as we continued to enhance our quality assurance requirements," Lynch said. "We estimate an aggregate net sales shortfall in the second quarter of up to $18 million in those products impacted." Lumber Liquidators expanded its compliance office after being investigated for imports of off-limits wood supplies.
"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.
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