Lumber Liquidators (LL) Reports Q2 2018 & First Half Results
Toano, VA, July 31, 2018-Lumber Liquidators reported that net sales rose 7.6% in Q2 2018.
Net sales in comparable stores rose 4.7%.
The company opened eight new stores during the second quarter of 2018, bringing the total store count to 406 as of June 30.
Net loss for the company in Q2 2018 was $1.259 million, compared to a net gain of $4.604 million in Q2 2017.
For the first six months of 2018, the company reported a net sales gain of 6.5%. Net loss for the company was $3.026 million, compared to a loss of $21.323 million in the same period last year.
It was also announced that at the start of 2020, the company will relocate its headquarters from Toano, Virginia to Richmond, Virginia. Said CEO Dennis Knowles, "The Toano/Williamsburg community has been a very supportive home for Lumber Liquidators during our 15 years here, and we will miss the community as we move a few miles west. At the same time, with a growing business and new leadership team focused on product innovation, core retail operations and the customer experience, it is the right time for us to relocate to a smaller facility in a metropolitan environment.”
In addition, the company announced its intention to exit its Bellawood finishing operations in Toano, though it will retain the Bellawood Trademark. “The company recently conducted a comprehensive internal review of its Bellawood products finishing lines, which currently employ approximately 45 people and is located in the corporate headquarters in Toano, Virginia. Based on this internal review, the company is exiting this finishing operation and focusing on its core competencies in merchandising, retail operations and the customer experience. To facilitate this change, on July 26, 2018, the company entered into an equipment purchase agreement pursuant to which the Company will sell its finishing lines and related equipment to an unaffiliated third party. The proceeds from this sale are expected to be approximately $1.8 million. The company also expects to recognize an impairment of approximately $2 million in the third quarter of 2018. The company has also entered into an agreement with the purchaser in which the purchaser has agreed to sell finished products and provide certain services to the company. This agreement will represent approximately one quarter (25%) of the unit production previously handled in the Toano facility, with the balance being supplied by other third party, unaffiliated vendors.”
According the analyst Stifel, “The company spent $1.3 million more y/y on advertising and will likely continue to see higher spending y/y. LL is now highlighting the installation services in national ads and will continue to message around this area as installation has been a positive contributor to ticket. Management commented that changes are being made to the advertising and marketing mix and the company would be more targeted and analytical with spending, particularly, in digital mediums. A new web platform is forthcoming in 2019. Clearly these are necessary initiatives as more and more of the project planning process takes places online.”