USA TODAY US Edition
Lumber Liquidators posts Q4 loss
Falls 73 cents a share in wake of reports from CDC and ‘60 Minutes’
Lumber Liquidators swung to a loss for the fourth quarter as fervor surrounding the hardware retailer’s business practices battered sales.
The chain posted a loss of $19.8 million in the fourth quarter, or 73 cents a share, a year after recording net income of $17.3 million, or 64 cents a share. Last year a 60 Minutes report exposed a high cancer risk from laminate flooring made in China and sold in the company’s stores.
Sales at stores open at least a year — a standard measure used to gauge a retailer’s health — tumbled 17.2% in the fourth quar- ter compared to a year earlier. Total sales fell 13.7% to $234.8 million.
The company last year halted sales of China-made laminates soon after accusations surfaced that formaldehyde in the flooring exposes customers to a high risk of cancer and other health problems.
Hope that the company had put the controversy in its past was extinguished last month when the Centers for Disease Control and Prevention reported that the health risk of the laminate flooring was three times higher than it had previously estimated.
The CDC had said on Feb. 10 that formaldehyde levels in the China-made flooring would cause two to nine cancer cases per 100,000 people. The new estimate is six to 30 cases per 100,000 people.
The company bought full-page advertisements in major U.S. newspapers Sunday to distance itself from the flooring and assure customers of the quality and safety of its other products.
In an unrelated matter, Lumber Liquidators recently agreed to a settlement with the U.S. Justice Department involving $13 million in penalties and five years of probation after acknowledging it was guilty of illegally importing wood from forests that are home to endangered species.
“Over the past quarter we have taken meaningful steps to re-establish Lumber Liquidators with our customers and our shareholders,” Lumber Liquidators CEO John Presley said Monday in a statement.
“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, Lumber Liquidators’ sales fell 6.6% to $978.8 million. Same-store sales declined 11.1%.
The company posted a net loss of $56.4 million for the year after earning a profit of $63.4 million in 2014.
Lumber Liquidators had 374 stores in the U.S. and Canada as of Dec. 31.