Lumber Liquidators struggles continue into a new year
TOANO, Va. - Lumber Liquidators (LL) reported a wider-than-expected first-quarter loss and sales declined for a fifth straight quarter as the flooring company spends heavily to put behind it damaging reports on potentially dangerous products imported from China.
The company will contribute $26 million and a million of its shares to a settlement fund to resolve a related class action. That follows an announcement last month that the Toano, Virginia, company would pay $2.5 million to settle allegations that some of its products violated California's air-safety standards. Last year, it paid $13.2 million in fines and pleaded guilty to environmental crimes for importing China-made flooring that contained timber illegally logged in eastern Russia.
Lumber Liquidators has been doing damage control and attempting to restore its reputation since a March 2015 airing of "60 Minutes," which revealed that some of the chain's Chinese-made laminate flooring contained high levels of formaldehyde.
For the period ended March 31, Lumber Liquidators Holdings Inc. lost $32.4 million, or $1.20 per share, for the period ended March 31. A year earlier it lost $7.8 million, or 29 cents per share.
The outsized losses far exceeded those projected by Wall Street, which had forecast per-share losses of 27 cents, according to analysts surveyed by Zacks Investment Research.
Shares slumped 9 percent before the opening bell Tuesday. In the past year, the company's stock has plunged more than 50 percent.
Selling, general and administrative expenses increased to $117.2 million from $97.7 million. This is mostly due to an approximately $16 million charge related to its consolidated securities class action matter.
Revenue dropped to $233.5 million from $260 million. That's below the $239.2 million in revenue that analysts polled by Zacks predicted.
Sales at stores open at least a year, a key indicator of a retailer's health, tumbled 13.9 percent.