Lumber Liquidators (Toano, Va.) lost $32.4 million in the first quarter of 2016, more than four times the company’s $7.8 million loss reported during the same period in 2015.
Sales for the first quarter of 2016 were $233.5 million, a decrease of 10.2 percent from the $259.9 million in sales in the first quarter of 2015. Comparable store sales dropped 13.9 percent year-over-year.
“Our management team is confident in the potential of our business, and we believe that by continuing to work our plan, we will return Lumber Liquidators to growth and profitability,” said CEO John Presley in a statement.
Lumber Liquidators stock was valued at $11.13 on market open May 10 after closing the night before at $13.45. The stock went up in value throughout the day Tuesday, ending at $12.39. It remains 82.1 percent below its value the day before the company announced a “60 Minutes” investigation into its Chinese-made laminate flooring product on Feb. 24, 2015.
Events relating to the original “60 Minutes” investigation plagued Lumber Liquidators during the first quarter of 2016.
In late February, the Centers of Disease Control and Prevention released its study into Chinese-made laminate’s potential to cause harm and then, a week later, revised its findings. It found the risk of cancer to be between six and 30 per 100,000 people exposed.
In March, Lumber Liquidators agreed to pay the California Air Resources Board $2.5 million and agreed to a series of quality assurance measures in order to settle the state agency’s claims against the retailer.
Separate from issues relating to its Chinese-made laminate, Lumber Liquidators was also sentenced by the Department of Justice, per a settlement agreed upon in October, for five criminal charges in February. Among the charges was a felony violation of the Lacey Act.
These events reinforced negative consumer sentiment against the retailer, according to a statement accompanying the company’s financial disclosure:
“The company believes net sales were impacted by changes in our promotional strategy and continued negative consumer sentiment regarding us, which was in part a result of heightened negative media coverage during the first quarter associated with certain Chinese laminate product that the Company discontinued in May of last year.”
The second quarter of 2016, however, has contained developments that Presley sees as “major steps in the right direction” for the company, he said during a conference call with investors.
The Proposition 65 lawsuit against the company in California was dismissed April 4. The lawsuit, which was featured in the “60 Minutes” investigation, alleged the company mislabeled its products as CARB-compliant when, the plaintiffs claimed, the products were not compliant.
On April 27, the company entered into a Memorandum of Understanding regarding a consolidated securities class action lawsuit. The MoU settlement will have a “minimal impact on cash,” Presley said.
“We are better-positioned to focus on rebuilding our brand, and ensuring we deliver on our promise of high quality, safe product and superior customer service,” he added.
