TOANO, Va. – Losses worsened at Lumber Liquidators during the first three months of its fiscal year and sales declined for a fifth straight quarter as the flooring company spent heavily to put behind it damaging reports of potentially dangerous and illegal products from China.
Its stock fell almost 8 per cent.
In a tentative agreement, the company, through its insurers, will contribute $26 million to a settlement fund to resolve a related class action. Lumber Liquidators will also contribute a million of its shares to the fund.
That follows an announcement last month that the Toano, Virginia, company would pay $2.5 million to settle allegations that some of its products violated California’s air-safety standards. Last year, it paid $13.2 million in fines and pleaded guilty to environmental crimes for importing China-made flooring that contained timber illegally logged in eastern Russia.
Lumber Liquidators has been in damage-control mode and attempting to repair its image since a February 2015 airing of CBS news show “60 Minutes,” which revealed that some of the chain’s Chinese-made laminate flooring contained high levels of the carcinogen formaldehyde.
For the period ended March 31, Lumber Liquidators Holdings Inc. lost $32.4 million, or $1.20 per share, for the period ended March 31. A year earlier it lost $7.8 million, or 29 cents per share.
The outsized losses far exceeded those projected by Wall Street, which had forecast per-share losses of 27 cents, according to analysts surveyed by Zacks Investment Research.
Its stock tumbled $1.06 to close Tuesday at $12.39. In the past year, the company’s stock has plunged 56 per cent.
Selling, general and administrative expenses increased to $117.2 million from $97.7 million. This is mostly due to an approximately $16 million charge related to its consolidated securities class action matter.
Revenue dropped to $233.5 million from $260 million. That’s below the $239.2 million in revenue that analysts polled by Zacks predicted.
Sales at stores open at least a year, a key indicator of a retailer’s health, tumbled 13.9 per cent.
Elements of this story were generated by Automated Insights (http://automatedinsights.com/ap) using data from Zacks Investment Research. Access a Zacks stock report on LL at http://www.zacks.com/ap/LL
Keywords: Lumber Liquidators Holdings, Earnings Report