Lumber Liquidator's stock price since Feb. 6, 2015. Via Google Finance.
Lumber Liquidators’ second quarter 2015 financials, posted this morning, show the company lost $20.3 million, a considerable turnaround from the profit of $16.6 the retailer reported for the second quarter of 2014 and reflective of the problems the company has faced since it was the subject of a “60 Minutes” episode on March 1.
Net sales also declined from $263.1 million in the second quarter of 2014 to $247.9 million this year, a 5.7 percent decrease. Comparable store net sales decreased 10 percent, which the company said was the result of a 7.6 percent decrease in the number of invoices and a 2.4 percent decrease in the average sale.
The company is still reeling from the impact of the “60 Minutes” report, which claimed the retailer’s Chinese-made laminate flooring contained levels of formaldehyde above those allowed by the California Air Resource Board standards. The show also alleged the company mislabeled its products as CARB-compliant.
The company addressed the issue in a statement accompanying its second quarter financials:
“The Company believes net sales were negatively impacted by unfavorable allegations surrounding the product quality of its laminates sourced from China as well as its decision to suspend sales of such products, although a specific quantification of the impact was impracticable.”
Company founder Tom Sullivan, who has been doing double duty as CEO after Robert Lynch resigned from the position “unexpectedly” in May, said in a statement that he believes the company can re-establish its connection with customers, employees and shareholders.
“As we now endeavor to get the Company back on track, we are going to return to those principles that made us great,” he said. “We're going to simplify the business, take care of our customers and deliver excellence at every level of the organization.”
He will endeavor without the presence of three top executives, including Lynch, who have left the company since the “60 Minutes” report aired in March. More than 100 lawsuits have been filed against the company alleging Lumber Liquidators sold unsafe products and mislabeled those products.
The company will also face charges from the Department of Justice under the Lacey Act for importing wood sourced illegally from endangered forests in Russia, although details on those charges are yet to be released.
The company’s stock was valued at $15.26 at the start of trading today, nearly an 18 percent drop from yesterday’s close of $18.59. The stock was $14.85 at press time. The company has not seen its stock reach such lows since the late 2011. Before the company announced at the end of February it would be the subject of a negative “60 Minutes” report, stock was trading at $68.78.
