Lumber Liquidators Profit Surges 91% in 3rd Quarter

Net income at Lumber Liquidators (Toano, Va.) surged 91.3 percent during the third quarter of 2012 compared with the third quarter of 2011 primarily due to stronger same-store sales, according to its most recent earnings report released Wednesday.

The company's net sales rose $32.3 million, or 18.8 percent, to $204.3 million in the third quarter from $172.0 million in the third quarter of last year. As sales from stores open at least one year rose 12.0 percent in the third quarter, the big box wood flooring retailer's net income rose to $12.9 million from $6.7 million in the third quarter of 2011. The company reported an 11.7 percent increase in the number of customers invoiced at comparable stores and a slight increase in the average sale.

Further, the company's gross margin reached 38.1 percent in the third quarter of 2012 compared to 35.6 percent in the third quarter of 2011. It said its increase in gross margin reflected generally lower product costs due to both sourcing initiatives and sales mix, partially offset by higher net transportation costs. Also, its selling, general and administrative (SG&A) expenses decreased as a percentage of net sales to 28.0 percent for the third quarter of 2012 compared to 29.3 percent for the third quarter of 2011, while its operating margin increased 380 basis points to 10.2 percent in the third quarter of 2012 from 6.4 percent in the third quarter of 2011.

"Our team continued to generate consistent strength in our top line by broadening our advertising reach and frequency, expanding our merchandise assortment and driving effective store execution," said Robert M. Lunch, Lumber Liquidators' president and CEO. "As a result, we delivered record operating margin and EPS in the quarter. Our value proposition, combining price, selection, quality and availability with the expertise and service provided by our people, resonated with customers during the quarter as we continued to capture share in our fragmented market."

Over the first nine months of fiscal 2012, the company's net income increased 86.9 percent to $33.3 million from $17.8 million in the first nine months of the prior year. Also during that time, its net sales increased 18.8 percent to $602.7 million from $507.1 million in the same period in 2011.

Taking all this into account, the company updated its company outlook, and said it expects to achieve the following in 2012:

• Net sales for the full year in the range of $791 million to $799 million, up from the previous range of $750 million to $775 million.
• Comparable store net sales for the full year increasing in the mid to high single digits.
• The opening of a total of 23 to 25 new store locations.

"Our team remains unified in its vision and motivated to continue taking market share through our powerful value proposition and uniquely profitable store model," Lynch added. "Even with record results through the third quarter, we are more excited than ever by the long-term opportunities that lie ahead. While our economy is facing a number of uncertainties in the coming months, our focus remains on continuous improvement in everything we do so that we can deliver value to our customers and shareholders."