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Why Lumber Liquidators Stock Just Dropped 10%

Rich Smith, The Motley Fool

What happened

Lumber Liquidators (NYSE: LL) stock is falling through the floor, down 10% as of 1:45 p.m. EDT after the floor coverings retailer reported a small sales miss but still met guidance for its fiscal Q2 2019 earnings report this morning.

Expected to earn $0.07 (pro forma) per share on sales of $291.5 million in its fiscal second quarter, Lumber Liquidators met the consensus earnings number but reported only $289 million in sales.

Glowing red stock arrow trending downward.

Image source: Getty Images.

So what

While Lumber Liquidators reported a pro-forma profit, its actual earnings as calculated according to generally accepted accounting principles (GAAP) were anything but positive -- in fact, the company lost $0.10 per share.

As for the sales number, it missed consensus estimates but was at least up 2% year over year, helped by sales from a handful of new store openings.

Now what

Despite the disappointing quarter, Lumber Liquidators management insisted that its "transformation plan remains on track, and we made solid progress in the second quarter with investments to bolster our digital presence, optimize our marketing initiatives...and continued progress building Pro and Installed sales."

That being said, the company is seeing "softened...customer traffic" and an "uncertain tariff environment," which is leading management to temper forward guidance. Sales growth this year, previously expected to be in the "mid-single digits," will now be in the "low single digits," with "flat" growth in same-store sales and a weaker profit margin.

Viewed in conjunction with the sales miss, investors are not liking this news one bit. Today, it's Lumber Liquidators itself that's finding its share price liquidated.


Rich Smith has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

This article was originally published on Fool.com