These 8 Simple Slides Show Why Lumber Liquidators Plunged Today

Source: Wikimedia Commons.

What’s Behind Today’s Plunge?

• Comps down 7.1%• Falling margins• Earnings-per-share

to drop 16% to 19%

Lumber Liquidators warned that 2nd-quarter results would be poor

Source: Lumber Liquidators.

Lumber Liquidators Seeing Margin Pressure

• Competition has required Lumber Liquidators to use more promotional discounting.

• Selling, general, and administrative costs rose 9% due to higher advertising, legal, and professional expenses.

Two main causes:

Source: Lumber Liquidators.

Big Impact on Full-Year Projections• Net sales guidance

cut 9% to 10%.• Comps projected

to fall to low single digits.

• 2-3 fewer store openings thanexpected.

• Earnings per share range cut $0.60, or 17% to 18%.Source: Wikimedia Commons.

But Lumber Liquidators Has Struggled All Year

Winter Woes Didn’t Spring Back

• Comparable-store sales were down 0.6%.

• But in areas where weather wasn’t a factor, comps rose by more than 8%, compared to a 14% drop in bad-winter areas.

First-quarter results were poor, but many blamed the winter weather as a one-time aberration.

Source: Wikimedia Commons.

More Trouble Ahead?

• “[W]e continue to believe we are early in a multi-year housing recovery that will drive home improvement spending.”

• “A number of the factors weighing on our second-quarter results are likely to continue in the second half of 2014.”

If housing slows, things will likely get worse for Lumber Liquidators.

CEO Robert Lynch is still counting on strength in housing in the long run, despite near-term challenges.

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