What happened
After Lumber Liquidators (NYSE:$LL) announced some disappointing quarterly results, shares for the specialty flooring retailer dropped 21% in October, according to data from S&P Global Market Intelligence.
Why? On average, analysts were expecting sales for the company to reach $261.8 million, and to have a comparable-sales growth of 5.3%, which should have earned them $0.02 per share. Instead, Lumber Liquidators announced that its quarterly revenue had climbed only 5.4%, or to $257.2 million, with a 3.8% increase in comparable-store sales. This meant that there was actually a net loss of $18.9 million, or $0.66 per share, from what was expected. These results were what caused the stock to plunge so drastically in October.
So what?
Despite these numbers, Lumber Liquidators did manage to achieve sales from hurricane-related headwinds during the quarter, and the primary loss in income was due to one-time charges related to an expected settlement of an ongoing class-action lawsuit, fellow Fool Jason Hall pointed out shortly after the report was announced. The lawsuit was a result of a line of Chinese-made laminate flooring, which has since been discontinued by the company and will therefore no longer affect the company’s income. Had it not been for these costs, the company would have actually exceeded expectations on the bottom line.
Now what
It was also pointed out by the CEO of Lumber Liquidators, Dennis Knowles, that this was the company’s fifth straight quarter of positive comps, and that both gross and operating margins continued to improve on an adjusted basis.
“We remain confident in the long-term strength of our unique business model, our value proposition, and the investments we have made in the capabilities of our people,” Knowles added.
Anyone looking to invest should also keep in mind that Lumber Liquidators’ stock is still up more than 80% so far in 2017, as of this article, which is no doubt a desirable consequence of its successful turnaround to date. That is why long-term investors would actually be wise to use this current drop as an opportunity to open or add to their positions.
Featured Image: twitter
