Lumber Liquidators First-Quarter Sales Better Than Expected

By Chelsey Dulaney 

Lumber Liquidators Holdings Inc. on Thursday said its first-quarter sales held up better than expected despite a 13% drop in March after a television segment alleged that some of the company's laminate-flooring products were unsafe.

In early March, CBS's "60 Minutes" alleged the company's Chinese-made laminate flooring doesn't meet California's emissions standards for levels of formaldehyde, a known carcinogen. The report sent the company's stock tumbling and prompted an investigation by the U.S. Consumer Product Safety Commission.

Shares, which have recovered 8% this week, remain 57% below their last closing price before the reported aired.

For the first quarter, Lumber Liquidators said its sales grew 5.6% to $260 million, in line with the company's forecast of $253.6 million to $265.6 million, which came after the 60 Minutes report. Analysts polled by Thomson Reuters had forecast $256.8 million in sales.

The hardwood-flooring company said its same-store sales fell 1.8% in the quarter, as the average sale fell 6.2%. The company had expected same-store sales to be between the range of negative 4.4% and a gain of 0.5%.

Strong performances in January and February helped to offset weakness in March, when comparable sales dropped 18%.

The company said laminate sales as a percentage of overall sales fell to 16.4% in March from 21.2% in February, before the segment aired.

Lumber Liquidators said it expects its first-quarter gross margin to fall to a range of 35.5% to 36.5% from 41.1% a year ago, due in part to lower retail prices in March.

The company also said about 10,000 customers have requested the in-home air-quality test kits it is offering.

Write to Chelsey Dulaney at [e-mail]

Access Investor Kit for CBS Corp.

Visit http://www.companyspotlight.com/partner?cp_code=P479&isin=US1248571036

Access Investor Kit for CBS Corp.

Visit http://www.companyspotlight.com/partner?cp_code=P479&isin=US1248572026

Access Investor Kit for Lumber Liquidators Holdings, Inc.

Visit http://www.companyspotlight.com/partner?cp_code=P479&isin=US55003T1079

Subscribe to WSJ: http://online.wsj.com?mod=djnwires