Lumber Liquidators hit by profit drop, possible DOJ charges

Despite weak sales and possible criminal charges from the Department of Justice, Lumber Liquidators Inc. plans to keep its aggressive expansion plans in 2015

In the fourth quarter of fiscal 2014, the retailer reported net income of $17.3 million, down 17% from $20.8 million in the same quarter the prior year.​The company says it intendsto open 30-35 new stores and remodel 15-20 stores in 2015.

In an SEC filing, the company says the DOJ has indicated it is considering pressing criminal charges against Lumber Liquidators under the Lacey Act, a conservation law that forbids trade of wildlife or plants that have been illegally obtained. The revelation follows the company's announcement days earlier of the creation of a newadvanced testing facility for quality control.

"The availability of our assortment was materially restored in the fourth quarter, and though our results were short of our expectations, we implemented changes to the marketing of our value proposition during the quarter which were the primary drivers of significant customer traffic late in the quarter and into 2015,” said Robert M. Lynch, president and CEO.

For the fourth quarter, net sales increased 5% to $272 million, from $258.4 million. Same-store sales decreased 4.2%, driven by a 5.3% decrease in the average sale partially offset by a 1.1% increase in the number of customers invoiced. For the full fiscal year, net income decreased 18% to $63.4 million, compared to $77.4 million the previous fiscal year. Net sales increased 5% to $1.05 billion, from $1 billion in 2013. Same-store sales dropped 4.3%.

Looking ahead, Lumber Liquidators expects net sales in the range of $1.14 billion to $1.21 billion, and same-store sales increasing in the single digits for fiscal 2015. With more than 350 locations, Lumber Liquidators is North America's largest specialty retailer of hardwood flooring.