Stifel Offers Insight On Lumber Liquidators' Q1 Earnings Release

St. Louis, MO, May 29, 2020-Stifel offered the following analysis following Lumber Liquidators’ (LL) Q1 2020 earnings release, 

“China. About 46% of LL’s products were subject to tariffs through most of 2019 but that declined to 10% to 15% in November 2019 when exclusions were given on click vinyl and engineered products. The tariffs a year ago impacted gross margin, and the company is flowing through product this year at normal costs and prices. This helped gross margin return to historical levels. The exclusion lasts until August 2020. While it appears some product is able to be bought outside of China, we believe the majority of it is not and thus are modeling the exclusion to continue past August of this year.

“Online improving. The new online Floor Finder tool released in February and the Picture It! tool that allows customers to see flooring in their actual room, helped drive online sales during the store closings. Online sales grew 260% in April from the 2019 run rate and made up 20% of total sales in April. A new digital platform is expected in Q3 that will enhance the customer experience especially with mobile. With the home centers mostly remaining opened it was imperative the online experience improve and be able to support customers.

Stifel also noted that, “The company canceled its largest sales event, the April Sale, which along with the store closings, will negatively impact sales in the June quarter.”