Hard-Surface Flooring Retailer LL Flooring Dodges Guidance: Here's Why

LL Flooring Holdings, Inc LL reported a third-quarter FY23 sales decline of 19.7% year-on-year to $215.85 million, beating the consensus of $212.80 million.

Sales decline was attributed to a decrease in transaction count, reflecting lower spending by consumers and Pros.

Total comparable store sales decreased 20.5% versus the same period last year.

Adjusted EPS loss expanded to $(0.78) from $(0.14) in 3Q22, missing the consensus of $(0.57).

Gross profit declined 28.3% Y/Y to $68.5 million, and gross margin contracted 390 bps to 31.7%. It was driven by an unfavorable $10.7 million 2012-2013 antidumping duty rate change and $1.6 million in incremental costs related to U.S. Customs (CBP) detentions.

Adjusted operating loss was $(17.1) million, and the margin was (7.9)%, down by 630 bps.

The company held liquidity of $120.2 million as of September 30, 2023. Operating cash flow for nine months totaled $8.4 million, compared to cash used of $(123.76) million a year ago.

Also Read: Live Ventures Submits Proposal to Acquire LL Flooring for $5.85 Per Share in Cash.

"We continue to navigate uncertainty in the macroeconomic environment due to low consumer confidence, inflation, an elevated interest and mortgage rate environment and lower existing home sales," commented President and Chief Executive Officer Charles Tyson.

Outlook: LL is not providing financial guidance now, citing uncertainty in the macroeconomic environment due to consumer confidence, inflation, a volatile interest and mortgage rate environment, and lower existing home sales.

The company expects full-year revenues to continue to be challenged due to macro uncertainty.

LL expects to spend ~$20 million in 2023 primarily to support strategic investments, including the Dallas distribution center, carpet rollout, and CRM.

Price Action: LL shares closed lower by 3.75% at $3.35 on Tuesday.