Lumber Liquidators (NYSE: LL) took a two-by-four to the noggin after posting a horrendous quarterly report, but it seems to have found the perfect scapegoat: German nerds.

The hardwood-flooring retailer blames most of its fiscal shortcomings on a dreadful implementation of a new SAP (NYSE: SAP) system. Bloated inventory levels, decreased store-level productivity, and poor customer conversion rates all supposedly stem from Lumber Liquidators' decision to upgrade its point-of-sale, warehouse management, and inventory control solutions.

Are all of the knocks true, or has Lumber Liquidators found the perfect fall guy? We may never know the truth, but the quarter looks ugly all the same.

Net sales climbed almost 5%, to $147.2 million, as brisk expansion helped offset the 5.7% decline in comps. The SAP hiccups, and the need to beef up payroll and warehousing costs to get through this rough patch, naturally slammed net margins. Earnings fell 45% to $0.15 a share.

Analysts were banking on a profit of $0.32 a share, on $161.5 million in revenue. Hey! Lumber Liquidators! Do you think you can throw us a bone next time, and actually warn us about so cruel a shortcoming?

I sang the praises of Lumber Liquidators this summer, pointing out how the company was outperforming home-improvement giants Lowe's (NYSE: LOW) and Home Depot (NYSE: HD).

I even broke out the workbench and made a table for you:

Q2 Growth

Net Sales



Home Depot 2% 9% 1.7%
Lowe's 4% 14% 1.6%
Lumber Liquidators 18% 28% 5.5%

Lowe's and Home Depot don't report for another two weeks, but I'm guessing they'll win this round.

This lousy quarter's saving grace -- and the only reason why Lumber Liquidators fell by 12% in after-hours trading last night, instead of outright plunging -- is that the company appears to be getting back on track.

Lumber Liquidators targets positive comps during the current quarter, and Wall Street's top-line guess at least lands within the company's range. Lumber Liquidators' guidance calls for $0.21 to $0.27 a share in earnings; that's short of the $0.30 a share that the pros are banking on, but it's a relative improvement to the third-quarter miss.

This wasn't a summer to remember for the home-improvement specialists. Decking specialist Trex (Nasdaq: TREX) posted an unexpected quarterly loss earlier this week. Lumberyards operator Builders FirstSource (Nasdaq: BLDR) and building products distributor BlueLinx (NYSE: BXC) haven't delivered a quarterly profit in two years.

Lumber Liquidators, once the shining star, must now prove itself worthy. Its technological scapegoat may be legitimate, but shareholders should carefully watch the next few quarters to make sure that the company isn't playing them for a SAP.

Would you rather own Lowe's, Home Depot, or Lumber Liquidators? Share your thoughts in the comment box below.

Home Depot and Lowe's are Motley Fool Inside Value recommendations. Lumber Liquidators is a Motley Fool Rule Breakers selection. The Fool owns shares of Lowe's and 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.

Longtime Fool contributor Rick Munarriz had hardwood flooring put into each of his past two homes, albeit long before Lumber Liquidators came to town. He does not own shares in any of the companies mentioned in this story. He is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool has a disclosure policy.