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.

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.