Lumber Liquidators Holdings Inc (NYSE:LL) announced financial results for the third quarter ended September 30, 2016.
Third quarter Results
Net sales in the third quarter of 2016 were $244.1 million, an increase of 3.4% from the third quarter of 2015. This includes a comparable store net sales increase of 1.0%, which reflected a 0.5% increase in customers invoiced in comparable stores. Non-comparable store net sales increased $5.6 million over the comparable prior year period. The Company opened one new store during the third quarter of 2016.
Gross margin was 31.4% in the third quarter of 2016, compared with 30.1% in the prior year period. The increase in gross margin was favorably impacted by the items highlighted in the attached supplemental schedule along with changes in the Company’s pricing strategy, where it reduced promotional activity and the sale of clearance product from 2015 levels, and increases in the sales mix of laminates and vinyl, which generally have lower retail price points and above average gross margins.
Selling, general and administrative (“SG&A”) expenses in the third quarter of 2016 were $100.7 million compared to $88.3 million in the prior year quarter. The costs in both periods were heavily impacted by the items highlighted in the attached supplemental schedule. The increase in SG&A year over year was driven by $3.3 million in higher payroll related costs as a result of greater store level staffing, commissions, and corporate function investment, net of retention costs incurred in 2015, $3.5 million in higher advertising, and the balance reflecting changes in other corporate expenses and legal and regulatory expenses. As a percentage of net sales, SG&A increased to 41.2% from 37.4% during the prior year period,
Net loss for the third quarter of 2016 was $18.4 million, or a loss of $0.68 per diluted share, as compared to a net loss of $8.5 million, or $0.31 per diluted share, during the prior year period.
Cash and cash equivalents at September 30, 2016 totaled $8.8 million compared with $26.7 million at December 31, 2015. At September 30, 2016, the Company had $20.0 million outstanding on its revolving credit facility, with remaining availability of $95.7 million. In August 2016, the Company increased its asset-based revolving credit facility to $150 million.
John Presley, Chief Executive Officer, commented, “We are pleased with the direction of our sales performance this quarter but recognize we have work to do to restore Lumber Liquidators to growth and profitability for the long term. We continue to invest in our value proposition while focusing on execution within the business and have taken steps to strengthen our financial position. We remain committed to the strategic direction we set for the Company and believe our actions will improve our performance over time.” (Original Source)
Shares of Lumber Liquidators are currently trading at $16.34, down $2.14 or -11.55%. LL has a 1-year high of $20.10 and a 1-year low of $10.01. The stock’s 50-day moving average is $18.01 and its 200-day moving average is $15.61.
On the ratings front, LL has been the subject of a number of recent research reports. In a report issued on July 28, Suntrust Robinson Humphrey analyst Keith Hughes reiterated a Hold rating on LL, with a price target of $10, which implies a downside of 46% from current levels. Separately, on the same day, Wedbush’s Seth Basham reiterated a Hold rating on the stock and has a price target of $15.
According to TipRanks.com, which ranks over 7,500 financial analysts and bloggers to gauge the performance of their past recommendations, Keith Hughes and Seth Basham have a yearly average return of 5.4% and 8.9% respectively. Hughes has a success rate of 57% and is ranked #1152 out of 4178 analysts, while Basham has a success rate of 48% and is ranked #595.
Lumber Liquidators Holdings, Inc. is a multi channel specialty retailer of hardwood flooring and hardwood flooring enhancements and accessories in the U.S. It offers exotic and domestic hardwood species, engineered hardwood, laminate, vinyl plank, bamboo and cork direct to the consumer. The company also provides a wide selection of flooring enhancements and accessories, including moldings, noise reducing underlay, adhesives and flooring tools.