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Expecting Negative Earnings For Lumber Liquidators This Week? These Analysts Are

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Expecting Negative Earnings For Lumber Liquidators This Week? These Analysts Are

Lumber Liquidators Holdings Inc (NYSE: LL) is scheduled to report its second-quarter results on Wednesday before market open. The Estimize community is expecting the company to earn $0.05 per share on revenue of $257.24 million (based on six estimates) while the Wall Street consensus estimate is looking for an earnings per share of $0.07 on revenue of $256.92 billion.

Piper Jaffray: Operating Margins To Remain Under ‘Significant' Pressure

Peter Keith of Piper Jaffray commented in a note on Monday that Lumber Liquidators will see a loss of $0.10 per share in its second quarter on a comp of negative 7 percent, marking no improvement from the April comp of negative 7.2 percent.

Keith is also modeling a gross margin erosion of 740 basis points year-over-year to 33 percent due to heavy promotional activity and a negative sales mix. The analyst added that the suspension of Chinese laminates on May 7 may have pressured gross margins even further as it removed the company's entry level and highest margin price point from its selling mix.

Looking forward, Keith pointed out three unresolved government issues are still outstanding and unresolved. These issues remain with the Department of Justice (Lacey Act), the Department of Commerce (anti-dumping) and the CPSC (formaldehyde emissions).

Keith also pointed out that the company already took a $10 million accrual in the second quarter related to the DoJ investigation while the company could owe as much as $13.4 million for back-dated purchases of engineered hardwood. Meanwhile, the CPSC's investigation remains ongoing but no penalties have been issued so far.

Shares remain Neutral rated with an unchanged $18 price target.

KeyBanc: Management Shuffle In Focus

Bradley Thomas of KeyBanc commented in a note in mid-June that Lumber Liquidators' announcement that its Chief Merchandising Officer William Schlegel will leave the company further indicates that the leadership team "remains in transition."

Lumber Liquidators also announced it will consolidate its marketing and merchandising efforts as the company's Chief Marketing Officer Marco Pescara will now oversee the company's merchandising initiatives. The move follows other resignations of top executives, including the ex-CFO Dan Terrell who left the company on April 29 while ex-CEO Rob Lynch unexpectedly resigned on May 21.

Thomas commented in his note that due to the "significant" leadership changes underway at Lumber Liquidators, he is taking a "more conservative view" and is expecting the company to report an earnings per share of $0.00 (versus a prior estimate of $0.06) in the second quarter and $0.22 in the third quarter (versus a prior estimate of $0.27).

For the full fiscal year 2015, Thomas lowered his earnings per share estimate to $0.32 from $0.43. 2016's full year estimates were also lowered to $1.35 from a previous $1.50.

Shares were Sector Weight rated with no assigned price target when the note was published.

Image credit: Dwight Burdette, Wikimedia

Latest Ratings for LL

DateFirmActionFromTo
Mar 2020Morgan StanleyMaintainsUnderweight
Feb 2020StifelMaintainsHold
Jan 2020Morgan StanleyDowngradesOverweightUnderweight

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