Lumber Liquidators Is Tanking: What You Need to Know

What's behind today's huge drop, and what investors should do about it.

Jul 10, 2014 at 5:45PM

Investors sent shares of Lumber Liquidators (NYSE:LL) behind the woodshed today, with the stock down 22% as of early afternoon trading. Shareholders were spooked by the flooring retailer's profit and sales warning for the next few quarters. Let's dig right in to the bad news.

A shockingly rough quarter
The company last night issued a business update for the second quarter ended June 30 that showed a scant 2% sales improvement. That's a far cry from the 16% revenue gain that Wall Street analysts expected. Comparable-store sales dove 7% as customer traffic levels sank. By comparison, Lumber Liquidators managed 15% comp growth in the prior-year period and just a minor dip in the first quarter of 2014. 


On top of that surprising revenue slowdown, the company now expects profit to fall by 18% to just $0.60 a share. Wall Street, meanwhile, targeted a 23% increase in earnings, to $0.90 a share. It's not a good sign for Lumber Liquidators' pricing power that big flooring discounts failed to keep sales growth humming along. 

It's more than weather
Management blamed residual effects from last quarter's harsh weather for part of the shortfall, but it's clear that something more fundamental is hurting the business. CEO Robert Lynch said in a press release that the housing market isn't providing the same lift that it did last year, citing "weak macroeconomic trends related to residential remodeling, including existing home sales." Still, even Lynch was caught flat-footed by the severity of the pullback: In April, he said that warmer weather was leading to a rebound in customer demand, but yesterday he explained that the March recovery "did not carry into May, and June weakened further." 

Given those trends, it isn't surprising that the company had to slash its outlook for the rest of 2014. Sales are now expected to reach about $1.1 billion, with comps potentially negative for the entire year. The new profit target is $2.82, or almost 20% below the forecast provided back in April. 

The (somewhat) good news for investors is that management at least seems aware that it has lots of work to do. Lynch said that his team has "a strong sense of urgency" around recovering business momentum over the next few quarters, with a multiyear housing recovery helping drive gains beyond that. 

Foolish bottom line
In light of those positive long-term trends, I wouldn't panic and sell the stock just based on this quarter's weakness. Still, I wouldn't look at today's dive as a buying opportunity, either. The company has some serious issues to tackle, and investors on the fence about purchasing Lumber Liquidators after this 20% discount should wait for a clearer outlook before jumping in.

The outlook seems more than promising for Apple's next smart device
Apple recently recruited a secret-development Dream Team to guarantee its newest smart device was kept hidden from the public for as long as possible. But the secret is out... and some early viewers are even claiming its everyday impact could trump the iPod, iPhone, AND the iPad. In fact, ABI Research predicts 485 million of these type of devices will be sold per year. But one small company makes this gadget possible. And its stock price has nearly unlimited room to run for early in-the-know investors. To be one of them, and see Apple's newest smart gizmo, just click here!

Demitrios Kalogeropoulos has no position in any stocks mentioned. The Motley Fool recommends and owns shares of Lumber Liquidators. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Money to your ears - A great FREE investing resource for you

The best way to get your regular dose of market and money insights is our suite of free podcasts ... what we like to think of as “binge-worthy finance.”

Feb 1, 2016 at 5:03PM

Whether we're in the midst of earnings season or riding out the market's lulls, you want to know the best strategies for your money.

And you'll want to go beyond the hype of screaming TV personalities, fear-mongering ads, and "analysis" from people who might have your email address ... but no track record of success.

In short, you want a voice of reason you can count on.

A 2015 Business Insider article titled, "11 websites to bookmark if you want to get rich," rated The Motley Fool as the #1 place online to get smarter about investing.

And one of the easiest, most enjoyable, most valuable ways to get your regular dose of market and money insights is our suite of free podcasts ... what we like to think of as "binge-worthy finance."

Whether you make it part of your daily commute or you save up and listen to a handful of episodes for your 50-mile bike rides or long soaks in a bubble bath (or both!), the podcasts make sense of your money.

And unlike so many who want to make the subjects of personal finance and investing complicated and scary, our podcasts are clear, insightful, and (yes, it's true) fun.

Our free suite of podcasts

Motley Fool Money features a team of our analysts discussing the week's top business and investing stories, interviews, and an inside look at the stocks on our radar. The show is also heard weekly on dozens of radio stations across the country.

The hosts of Motley Fool Answers challenge the conventional wisdom on life's biggest financial issues to reveal what you really need to know to make smart money moves.

David Gardner, co-founder of The Motley Fool, is among the most respected and trusted sources on investing. And he's the host of Rule Breaker Investing, in which he shares his insights into today's most innovative and disruptive companies ... and how to profit from them.

Market Foolery is our daily look at stocks in the news, as well as the top business and investing stories.

And Industry Focus offers a deeper dive into a specific industry and the stories making headlines. Healthcare, technology, energy, consumer goods, and other industries take turns in the spotlight.

They're all informative, entertaining, and eminently listenable. Rule Breaker Investing and Answers are timeless, so it's worth going back to and listening from the very start; the other three are focused more on today's events, so listen to the most recent first.

All are available for free at

If you're looking for a friendly voice ... with great advice on how to make the most of your money ... from a business with a lengthy track record of success ... in clear, compelling language ... I encourage you to give a listen to our free podcasts.

Head to, give them a spin, and you can subscribe there (at iTunes, Stitcher, or our other partners) if you want to receive them regularly.

It's money to your ears.


Compare Brokers