Lumber Liquidators Holdings, Inc. (NYSE: LL)
Lumber Liquidators, America’s largest retailer of hardwood floors, has been under constant pressure since “60 Minutes” aired a cataclysmic report on LL and its Chinese sourced flooring which supposedly contained exorbitant levels of formaldehyde. Whitney Tilson, the hedge fund manager of Kase Capital, also was a driving force behind the stocks collapse as he was adamant on his bet against the company at just over $100 per share and says there is a 50% chance that LL will declare bankruptcy. Currently, shares of LL are trading at roughly $13. Does LL have any chance in regaining lost ground or will Mr. Tilson’s belief come true?
On Friday afternoon, analysts at Raymond James had the following comments after a recent conference.
Yesterday, we had the opportunity to host Lumber Liquidators senior leadership at our
spring investor conference in Boston. Questions from investors gravitated towards Multi
District Litigation (MDL) related to product liability, the pending CPSC decision, and
revenue growth. Management admits that the timing on both is uncertain but the MDL
case is being tried in the Eastern District of Virginia (Rocket Docket) which is known for its
speed of execution.
The timeline for CPSC is harder to peg but management expects a
decision shortly. In 2014 each Lumber Liquidators store averaged approximately $3 million in sales. Today, that figure stands at $2.3 million. In his remarks, CEO Presely stated that the $700,000 gap can be closed by each store making roughly one additional sale per day or increasing the average price per square foot sold by $0.10 to $0.15, a feat we believe is achievable with properly trained sales staff in place.
About Lumber Liquidators Holdings, Inc.
Lumber Liquidators Holdings, Inc. (Lumber Liquidators), incorporated in November 12, 2009, is a multi-channel specialty retailer of hardwood flooring, and hardwood flooring enhancements and accessories. The Company offers an assortment of exotic and domestic hardwood species, engineered hardwood, laminate and resilient vinyl flooring direct to the consumer. The Company also features the renewable flooring products, bamboo and cork, and provides a selection of flooring enhancements and accessories, including moldings, noise-reducing underlay, adhesives and flooring tools. The Company also provides in-home delivery and installation services to certain of its customers. The Company’s product categories include Solid and Engineered Hardwood; Laminate; Bamboo, Cork and Vinyl Plank, and Moldings and Accessories. The Company sells its products primarily to homeowners or to contractors on behalf of homeowners. Lumber Liquidators operates over 375 stores located in over 50 states and Canada. In addition to its stores in Ontario, Canada, the Company has over 370 the United States stores in operation.