What

Shares of hardwood flooring specialty retailer Lumber Liquidators Holdings Inc. (NYSE:LL) were up 16.8% at market close on Feb. 21, following the release of the company's fourth-quarter and full-year 2016 results today. 

The company said revenue was up 4.3% to $245 million in the quarter, with much of that figure coming from the 2.8% jump in sales open at least 13 months. After seeing comparable-store sales decline every quarter for more than a year, the company has now delivered two consecutive quarters of comparable sales growth. Gross margin was 32.9%, a sharp improvement from 23% in the year-ago quarter. 

Installer laying wood flooring.

Lumber Liquidators' sales have improved over two consecutive quarters. Image source: Getty Images.

So what

Lumber Liquidators also delivered operating results that the market seems to have viewed in a favorable light. SG&A expenses increased $4.2 million in the quarter, which works out to 20 basis points as a percentage of total revenue. And while expenses remain high, the breakdown of these costs offers some reason to be optimistic. Management said it spent $5.5 million more on store-related payroll, including store staffing and installation/pro sales teams, and it also increased advertising spending by $1.5 million.

In other words, there's some indication that the inflated legal and settlement expenses related to the company's product issues are beginning to fall, allowing the company to dedicate more of its resources to growing sales. 

Now what

Despite the improved sales, Lumber Liquidators is still operating at a loss. The company reported a net loss of $5.5 million, or $0.020 per share, in the fourth quarter, and a full-year loss of $68.6 million, or $2.51 per share. And while legal expenses -- $3.4 million in the fourth quarter -- related to its ongoing litigation have fallen a little recently, these costs will continue to weigh on the bottom line until the company can reach resolution on those cases.

The good news is, the company does have some wiggle room, with $10 million in cash and $91 million available on its revolving credit facility, to ride out a few more quarters of negative cash flows as it invests in restarting growth.

Looking for more on Lumber Liquidators' earnings results? Stay tuned for a deeper dive in coming days. 

Jason Hall owns shares of Lumber Liquidators. The Motley Fool recommends Lumber Liquidators. The Motley Fool has a disclosure policy.