Lumber Liquidators Holdings, Inc. (LL) SEC Filing 10-K Annual report for the fiscal year ending Thursday, December 31, 2020

​

​

FOR IMMEDIATE RELEASE

​

LL FLOORING REPORTS FOURTH QUARTER AND FULL YEAR

2020 FINANCIAL RESULTS

​

RICHMOND, Va., March 2, 2021 – Lumber Liquidators (“LL Flooring” or “Company”) (NYSE: LL), a leading specialty retailer of hard-surface flooring in North America, today announced financial results for the fourth quarter and full year ended December 31, 2020.

​

“We closed 2020 strong with fourth quarter comparable sales up 10.5%, reflecting continued execution on our transformation plan that positioned us to capitalize on robust consumer demand for home improvement projects,” said President and Chief Executive Officer Charles Tyson. “I am pleased with the progress our team is making on our four strategic pillars: people and culture, improving the customer experience, driving traffic and transactions, and improving profitability. For the full year 2020, we delivered $1.1 billion of net sales, demonstrating resilience as we navigated the COVID-19 shut down in the spring to grow comparable sales 10.8% in the second half. Our profitability initiatives drove a $40 million increase in operating income and a 360 basis points increase in operating margin on similar net sales versus 2019. I want to thank our team members for serving our customers every day to deliver these impressive results.

​

“So far in 2021, our industry continues to benefit from consumer investment in home improvement. That said, there remains a good deal of uncertainty due to COVID-19, potential changes in consumer spending priorities and supply chain volatility. We are well positioned with a strong balance sheet and the financial flexibility to continue to execute our transformation, allowing us to adjust quickly to the environment, if needed. We strive to become the customers’ first choice in hard-surface flooring by providing the best experience from start to finish, and plan to differentiate ourselves by offering the high-quality selection, expertise and high-touch service of a local store combined with the scale, omni-channel convenience and value of a national brand. We see substantial opportunity ahead to continue to evolve our Company and increase shareholder value over the long term.”

​

Fourth Quarter Results

​

Net sales in the fourth quarter of 2020 increased $30.4 million, or 11.1%, to $304.2 million from the fourth quarter of 2019. Comparable store sales for the fourth quarter of 2020 increased 10.5% primarily as a result of continued execution against the Company’s transformation plan and healthy consumer demand for home improvement projects. Net merchandise sales increased 11.2% while net services sales (install and freight) increased 10.2% over the prior year. As previously announced, the Company closed 14 stores and opened one new store in the fourth quarter of 2020 bringing total store count to 410 as of December 31, 2020.

Gross profit increased 5.4% in the fourth quarter of 2020 to $117.9 million from $111.9 million in the comparable period in 2019 and gross margin decreased 210 basis points to 38.8% in the fourth quarter of 2020 from 40.9% in the fourth quarter of 2019. For the fourth quarter of 2020, the Company reported a net positive $1.8 million impact from anti-dumping and countervailing duty rate changes compared to 2019. Additionally, the fourth quarter of 2020 included costs related to Canadian and US store closures. Excluding these items as shown on the table that follows, Adjusted Gross Profit (a non-GAAP measure) increased by $3.5 million and Adjusted Gross Margin (a non-GAAP measure) decreased by 290 basis points. The decrease in adjusted gross margin was due to last year’s approximately $13 million benefit from the retroactive exclusion of tariffs on certain flooring products imported from China (discussed in the “Section 301 Tariffs” section that follows) partially offset by merchandising sourcing and cost-out efforts, and, to a lesser extent, selective retail price increases.

​

SG&A expense increased 7.5% to $99.6 million, or 32.7% of sales, down 110 basis points in the fourth quarter of 2020 from the comparable period in 2019. SG&A in both quarters included certain costs related to legal matters. Additionally, the fourth quarter of 2020 included $1.2 million of costs related to Canadian and US store closures. Excluding these items as shown in the table that follows, Adjusted SG&A (a non-GAAP measure) increased 4.4% to $97.0 million. The increase in adjusted SG&A was primarily driven by higher bonuses and commissions consistent with the Company’s