Lumber Liquidators beats by $0.10, misses on revs; tempers FY18 revenue, comps growth guidance; comments on tariffs
- Reports Q3 (Sep) earnings of $0.27 per share, excluding non-recurring items, $0.10 better than the S&P Capital IQ Consensus of $0.17; revenues rose 6.4% year/year to $270.47 mln vs the $281.82 mln S&P Capital IQ Consensus.
- Net sales in comparable stores increased $5.3 million, or 2.1%, driven by the expansion of installation services, whose sale in comparable stores was up 39%, which more than offset a 1.3% decline in merchandise sales. The comparable store growth reflected a 5.5% increase in average sale, driven by both higher attachment of installation to the sale, and increased mix of pro customers that have larger purchases, and was partially offset by a 3.4% decrease in the number of transactions. Net sales in non-comparable stores increased $8.0 million.
- Updated FY18 Outlook:
- Total revenue growth of mid single digits (Previously saw mid to upper single digits)
- Comp store sales growth of 2.5% - 3.5% (Previously saw mid-single digits)
- Adjusted operating margin of 1.6 - 2.0% (Previously saw 2% - 3%)
- Commentary on tariffs
- The Company sources approximately 45% of its products from China. Virtually all of these products had a 10% tariff imposed upon them effective September 24, 2018 and many of these products are at risk to have tariffs increased to 25% as of January 1, 2019. The Company has several approaches to address this situation including adjusting its pricing, partnering with current vendors to lower costs, and altering its supply chain to source the same or similar products from other countries at lower costs. The Company continues to monitor market pricing and promotional strategies to inform and guide its decisions. As the Company examines each product, it employs one or more of the above approaches in an effort to mitigate the impacts of these tariffs.
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