Lumber Liquidators Loss Exceeds Wall Street Expectations As Flooring Concerns Hit Sales

By Barbara KollmeyerMarketWatch Pulse

Lumber Liquidators Holdings Inc. on Monday posted a much bigger loss than analysts expected as the retailer's sales took a hit from allegations surrounding the safety of laminates in its hardwood flooring. The company posted a fourth-quarter net loss of $0.73 per share compared to income of $0.64 in the year-ago period. Net sales decreased 13.7% from the year-ago period to $234.8 million, which included a same-store net sales decline of 17.2%. That was due to a 15.6% fall in the number of customers invoiced and a 1.6% fall in the average sale. A survey of analysts polled by FactSet Research had forecast a loss of $0.19 on sales of $251.3 million. Lumber Liquidators said it "believes net sales continued to be negatively impacted by certain unfavorable allegations surrounding the product quality of its laminates sourced from China." Shares of the company plunged Feb. 22 after the Centers for Disease Control and Prevention said it had incorrectly assessed the cancer risk associated with the company's flooring, and that the risk was much higher than from other products. In a statement connected to the earnings, John Presley, chief executive officer, said the company's "business model is intact, we are addressing legacy issues with clarity and candor, and we are rebuilding our brand." The company simultaneously announced the appointment of Chief Operating Officer Dennis R. Knowles. Shares of Lumber Liquidators fell 1.8% in premarket trading.

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