TOANO, Va.-- Lumber Liquidators (NYSE: LL), the largest specialty retailer of hardwood flooring in North America, today announced financial results for the second quarter and six months ended June 30, 2013, and raised its outlook for 2013.
Second Quarter Results
Net sales increased $46.8 million, or 22.2%, to $257.1 million in the second quarter of 2013 from $210.3 million in the second quarter of 2012. Comparable store net sales increased 14.9% for the quarter, driven by a 9.1% increase in the number of customers invoiced and a 5.4% increase in the average sale. Non-comparable store net sales increased $15.4 million. The Company opened seven new stores during the second quarter.
Gross margin was 41.3% in the second quarter of 2013 compared to 37.3% in the second quarter of 2012. The increase in gross margin reflects generally lower net product costs, a net increase in the average retail price per unit sold and operational efficiencies across the organization.
Selling, general and administrative ("SG&A") expenses increased as a percentage of net sales to 28.4% for the second quarter of 2013 compared to 27.9% for the second quarter of 2012. Operating margin increased 350 basis points to 12.9% in the second quarter of 2013, from 9.4% in the second quarter of 2012.
Net income increased 67.7% to $20.4 million, or $0.73 per diluted share, in the second quarter of 2013 from $12.2 million, or $0.43 per diluted share, in the second quarter of the prior year.
Cash and cash equivalents at June 30, 2013 totaled $84.7 million compared with $31.5 million at June 30, 2012 and $64.2 million at December 31, 2012.
Robert M. Lynch, President and Chief Executive Officer, commented, "The team focused on our key strategic initiatives and achieved outstanding results through the important spring remodeling season. Our value proposition of price, selection, quality, availability and expertise continues to be recognized by a growing customer base, and our commitment to continuous improvement drove strong performance throughout the organization. We are pleased that our coordinated efforts enabled us to capture additional market share and deliver record operating margin."
First Six Months Results
Net sales increased 22.4% to $487.5 million in the first six months of 2013 from $398.4 million in the first six months of 2012. Comparable store net sales increased 15.0% for the first half of 2013, compared to 10.1% for the first half of the prior year. Non-comparable store net sales increased $29.3 million over the prior year. The Company opened 12 new stores during the first six months of 2013 and as of June 30, 2013, operated 300 stores in 46 states and Canada.
Gross margin increased to 40.8% for the first six months of 2013 from 37.3% in the same period of 2012. SG&A expenses improved to 28.8% of net sales for the first half of 2013, compared to 29.0% of net sales for the first half of 2012. Operating margin increased 370 basis points to 12.0% in the first six months of 2013, from 8.3% in the first six months of 2012.
Net income increased 77.7% to $36.2 million, or $1.30 per diluted share, in the first half of 2013 compared to $20.4 million, or $0.72 per diluted share, in the first half of the prior year.
Based on year-to-date results and current trends, the Company now expects to achieve the following for the full year:
Net sales for the full year in the range of $940 million to $963 million, from a previous range of $913 million to $942 million.
Comparable store net sales increasing in the high-single to low double-digits.
The opening of a total of 16 to 20 new store locations in the second half of the year, for a total of 28 to 32 new store locations in 2013, narrowing the previous range of 25 to 35 new store locations.
Earnings per diluted share in the range of approximately $2.45 to $2.60, based on a diluted share count of approximately 28.0 million shares, which is exclusive of any future impact of the stock repurchase program, up from a previous range of $2.10 to $2.35.
Mr. Lynch concluded, "We were thrilled to open our 300th store in the second quarter. Since the end of 2008, we have doubled our footprint and provided more than 1.9 million customers with their flooring solution. We believe our new 'store of the future' format is resonating well with a broader base of customers, and we look forward to bringing our total store count in this new format to approximately 50 by year-end. Our success in expanding gross margin allows us to reinvest across our industry-leading value proposition, and we see multi-year opportunities to expand operating margin while we continue to grow our store base."
The Company today also announced that Mr. Lynch and Daniel E. Terrell, Chief Financial Officer, will present at the Canaccord Genuity Growth Conference. The Company's presentation is scheduled for Wednesday, August 14, 2013 at 9:00 a.m. Eastern Time in Boston. The live webcast and replay of the Company's presentation may be accessed via audio webcast at the Investor Relations section of the Company's website, www.lumberliquidators.com.
About Lumber Liquidators
With over 300 locations, Lumber Liquidators is North America's largest specialty retailer of hardwood flooring. The Company features more than 340 first quality flooring varieties, including solid and engineered hardwood, bamboo, cork, laminate and resilient vinyl. Additionally, Lumber Liquidators provides a wide selection of flooring enhancements and accessories to complement, install and maintain your new floor. Every location is staffed with flooring experts who can provide advice and useful information about Lumber Liquidators' low priced product, much of which is in-stock and ready for delivery.
With quality brands including Bellawood Prefinished Hardwood and Morning Star Bamboo, Lumber Liquidators' flooring is often featured on popular television shows such as HGTV's Dream Home.
For more information, please visit www.lumberliquidators.com
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