What happened
Shares of Lumber Liquidators (NYSE:LL) dropped 21% in October, according to data from S&P Global Market Intelligence, after the specialty flooring retailer announced disappointing quarterly results.
The stock plunged late in the month after Lumber Liquidators confirmed that its quarterly revenue had climbed 5.4%, to $257.2 million, including a 3.8% increase in comparable-store sales. That translated to a net loss of $18.9 million, or $0.66 per share. But analysts, on average, were expecting earnings of $0.02 per share on higher sales of $261.8 million, and higher comparable-sales growth of of 5.3%.
IMAGE SOURCE: GETTY IMAGES.
So what
To be fair, Lumber Liquidators achieved its modest top-line growth despite a "slight negative impact" on sales from hurricane-related headwinds during the quarter. And as fellow Fool Jason Hall pointed out shortly after the report, its net loss stemmed primarily from one-time charges related to an expected settlement of an ongoing class-action lawsuit, which itself stemmed from a since-discontinued line of Chinese-made laminate flooring. Adjusted for those unusual items, Lumber Liquidators would have actually exceeded expectations on the bottom line.
Now what
Lumber Liquidators CEO Dennis Knowles also noted this was the company's fifth straight quarter of positive comps, while both gross and operating margins continued to improve on an adjusted basis.
"We remain confident in the long-term strength of our unique business model, our value proposition, and the investments we have made in the capabilities of our people," Knowles added.
Investors should also keep in mind that that Lumber Liquidators stock is still up more than 80% so far in 2017 as of this writing -- an enviable consequence of its successful turnaround so far. As such, I think long-term investors would be wise to use this pullback as an opportunity to open or add to their positions.
Newly released! 10 stocks we like better than Lumber Liquidators
On November 10, investing geniuses David and Tom Gardner revealed what they believe are the ten best stocks for investors to buy right now… and Lumber Liquidators wasn't one of them! That's right -- they think these 10 stocks are even better buys.
And when the Gardner brothers have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*
