Why Lumber Liquidators Holdings Inc.'s Shares Dropped 12.5% Today

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What: Shares of flooring retailer Lumber Liquidators Holdings Inc. (NYSE: LL) slumped as much as 12.5% today after the company reported second-quarter earnings. At 3:15 p.m. EDT shares were still down 9.7%.

So what: Sales fell 4% to $238.1 million, including a 7.2% decline in comparable-store sales. Net loss improved from $20.3 million a year ago to $12.2 million, or $0.45 per share. But analysts were expecting a $0.22-per-share loss, so the results didn't impress investors.

Management said that it didn't have to discount as hard last quarter, resulting in gross margin increasing from 25.1% a year ago to 29.7%. But with fewer customers coming into stores, it's still an uphill battle to reach a profit on the bottom line.

Now what: Investors don't quite know what to make of Lumber Liquidators today, given customers' trepidation in coming back to the brand. No matter whether it hit expectations or not, a 7.2% decline in same-store sales is terrible for any company. Until that trend turns around and Lumber Liquidators starts posting a profit, I'll be watching this stock from the sidelines. And given the damage done in the past year, I'm not sure the company will ever fully recover.

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Travis Hoium has no position in any stocks mentioned. The Motley Fool recommends Lumber Liquidators. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.