Lumber Liquidators posts first-quarter loss
Toano-based Lumber Liquidators continues to feel the backlash from negative publicity, including a March report on “60 Minutes” questioning the safety of its Chinese-made laminate floors.
The report that said the company’s Chinese-made laminate floors contained unsafe levels of formaldehyde. Lumber Liquidators has denied the claims and is standing by the safety of its products.
The company posted a net loss of $7.8 million, or 29 cents per diluted share, during the first quarter 2015 as opposed to net income of $13.7 million, or 40 cents per diluted share, during the same time last year.
Lumber Liquidators attributed questions raised about the safety of its Chinese-made laminate floors to a decrease in net sales last month, which fell to $89.4 million, a 12.8 percent drop from March 2014. Net sales in the first quarter of 2015 were $260 million, an increase of 5.6 percent from the first quarter of 2014.
The company also said its CFO Daniel E. Terrell is stepping down on June 1. At that time, Gregory A. Whirley Jr. will take over as interim CFO and serve as senior vice president, finance.
Whirley was most recently senior manager – national professional practice at Ernst & Young, a company he has been with for the last 13 years. Whirley served on the team that supported Lumber Liquidators when it went public in 2007 and has worked on the company's account in the past.
So far in the second quarter of 2015, net sales through April 27 decreased 2 percent and net sales at comparable stores decreased 7 percent.
The company said it could not provide a full year outlook, but said it still planned to open 25 to 35 new stores; remodel 10 to 20 existing stores and have capital expenditures between $20 million and $30 million.
It also said the Department of Justice is seeking criminal charges under the Lacey Act, which prohibits trade in wildlife, fish, and plants that have been illegally sold. When warning investors of risk factors, Lumber Liquidators said it is involved in a number of government investigations and legal actions, many of which have resulted from allegations about the company and its product.