Advertising Strategy Helps Lumber Liquidators

New York, NY, Oct. 24, 2013 -- Flooring industry analyst Stifel Nicolaus said that Lumber Liquidators' change in advertising strategy has helped the company's financial performance.

Analyst John Baugh said, "It seems pretty clear that the company’s shift in advertising strategy roughly 18 months ago to focus on a broader and more frequent ad campaign as opposed to focusing on only the 'hard core DIYer' has paid dividends."

Spending on advertising was up another 50 basis point for the quarter as a percentage of revenue and up over 30% in total.

"The effectiveness of the strategy is evidenced by the company’s strong 16% growth in stores older than three years, which typically have grown at a much slower pace," Baugh said.

He also noted that a new retail format featuring an expanded showroom has also helped. New stores use the format and 10 stores have been renovated into the new format.

"Clearly the company continues to perform very well from an operational stand point. Customers are coming into the stores at a good pace and margins are improving on higher tickets and average selling prices as well as continued sourcing improvements," Baugh said.

In a conference call, the firm did not provide more information about its alleged violation of the Lacey Act.