Lumber Liquidators is targeting 400 stores in North America

Analyst Bradley B Thomas of KeyBanc Capital Markets reiterated their “buy” rating for Lumber Liquidators Inc (NYSE: LL). The target price has been raised from $26 to $28.

LL has about 8%-9% share in the hardwood market and 3%-4% in the laminates market. According to LL, there is substantial opportunity to expand its share in these markets without seeking the help of Home Depot (NYSE: HD) or Lowe's (NYSE: LOW). Moreover, LL can compete successfully with HD and LOW, given that it offers better pricing and services than either of these companies, KeyBanc Capital Markets said. However, LL plans to focus on expanding through organic growth by opening 30-40 stores per annum in the near future, with a target of expanding its store base to 400 stores in North America, KeyBanc Capital Markets.

Lumber Liquidators maintained that it can deliver 10-20 basis points of gross margin improvement per annum and 50-60 basis points of SG&A leverage every year. According to KeyBanc Capital Markets, LL’s new sourcing program in China is delivering healthy results. KeyBanc Capital Markets believes that Lumber Liquidators is a compelling stock option, given the company’s robust unit economics, market share gains and margin expansion potential.