Things were worse than expected for Lumber Liquidators in the fourth quarter, which experienced decreased customer activity that was likely due to cancer-related concerns over its laminate flooring.
Net sales for the quarter ended Dec. 31, 2015 were down 13.7% year-over-year to $234.8 million, including a comparable store net sales decline of 17.2% that was based on a 15.6% decrease in customer count and a 1.6% decrease in the average sale.
However, non-comparable store net sales increased $9.6 million over the comparable prior year period.
The company also went into the red during the quarter, with a net loss of $19.8 million comparing to a net income of $17.3 million in the year-ago period.
Gross margin was down to 23.0% from 39.2% in the prior-year period, owing to its $22.2 million reduction in the carrying value of its China-sourced laminate flooring.
"Over the past quarter we have taken meaningful steps to reestablish Lumber Liquidators with our customers and our shareholders," said CEO John Presley. "While we have made some progress in key areas such as compliance and core operational efficiency, we still have a long way to go. That said, our business model is intact, we are addressing legacy issues with clarity and candor, and we are rebuilding our brand."
For the full-year fiscal period, net sales were down 6.6% to $978.8 million, with comparable store net sales down 11.1%. A net loss of $56.4 million compared unfavorably to a net income of $63.4 million in 2014.
"As we begin 2016, we are focused on four main areas that we believe will provide a strong foundation for Lumber Liquidators," added Presley. "First, we will concentrate on store performance and execution. Second, we will strengthen our value proposition to customers. Third, we will continue to enhance our vigilance surrounding responsible and compliant sourcing. Finally, we will opportunistically expand our business to better serve our customers. We believe that if we execute on these areas with excellence and integrity, we will build a stronger Lumber Liquidators for our customers, our employees and our shareholders."
Lumber Liquidators also announced the appointment of Dennis Knowles as COO, effective March 1, 2016.
Knowles has more than 25 years of leadership experience in store and business operations, most recently serving as COO at Lowe's, where he oversaw the omnichannel operations of more than 1,700 Lowe's stores across the country.
"I am excited to be joining Lumber Liquidators," said Knowles. "This is a pivotal time for the company to refocus our efforts on elevating store performance, underscore our commitment to customer service and enhance the quality and diversity of our product offering. I look forward to working with the entire senior management team as well as our store managers and associates to position Lumber Liquidators for success in the years to come."
"We are extremely pleased to welcome someone of Dennis' caliber to our senior leadership team, particularly as we focus on strengthening our value proposition and the performance of our store network across North America," said Presley. "Dennis' mix of retail, leadership and business experience is uniquely suited for Lumber Liquidators and is an ideal complement to our leadership team. We look forward to benefitting from his contributions and leveraging his store operations and home improvement expertise to deliver quality service to our customers and drive value for our stakeholders."