Lumber Liquidators Sees Weak Q2, Cuts FY Outlook; Stock Plunges - Update

(RTTNews) - Specialty retailer of hardwood flooring Lumber Liquidators (LL), Wednesday detailed a weak outlook for the second quarter as harsh winter weather hurt customer traffic, and also slashed expectations for the full year.

Following the announcement, Lumber shares slid 17 percent in after-hours trade on the New York Stock Exchange, after having dropped 8 percent in regular trade.

The company's guidance comes at a time of certain weak macroeconomic trends related to residential remodeling, including existing home sales.

There was some improvement in customer demand in mid-March, but sales slackened in May and June, said CEO Robert Lynch.

Toano, Virginia-based Lumber expects second-quarter earnings of $0.59 to $0.61 per share. On average, 15 analysts polled by Thomson Reuters project earnings of $0.90 per share for the quarter. Analysts' estimates typically exclude special items.

In the prior-year quarter, the company reported earnings of $0.73 per share.

The company said its second-quarter sales rose 2.3 percent to $263 million from $257 million in the prior year. Analysts expected revenue of $303 million for the quarter.

Comparable store sales for the quarter slid 7.1 percent.

The company expects gross margin in the second quarter to weaken, due to shifts in sales mix and discounting.

Selling and general expenses are expected to be 9 percent higher due to advertising, occupancy, and other costs.

For fiscal year 2014, Lumber now estimates earnings of $2.65 to $3.00 per share and sales of $1.05 billion to $1.10 billion. The company earlier expected earnings of $3.25 to $3.60 per share and sales of $1.15 billion to $1.20 billion.

Analysts currently expect earnings of $3.34 per share and sales of $1.16 billion for the year.

The company expects full-year comparable store sales in the low single digits, either positive or negative, from the previous increase ranging from mid to high single digits.

"We now believe the prolonged purchase cycle associated with our customers' discretionary, large-ticket home improvement projects is likely to be delayed for some customers into the fall flooring season, and for others, into spring of 2015," said CEO Lynch.

At the end of June, the company operated 344 stores.

WDFC closed Wednesday at $70.42, down $6.17 or 8.06%, on a volume of 5.9 shares. In after hours, the stock dropped $12.27 or 17.42%.