RICHMOND, Va., April 20, 2020 /PRNewswire/ -- Lumber
Liquidators (NYSE: LL), a leading specialty retailer of
hard-surface flooring in North
America, today provided an update related to COVID-19 and
the Company's operations.
"The health and safety of our customers, employees and
communities remains our top priority as we adjust our operations to
respond to COVID-19, strive to meet the needs of our customers
nationally and navigate the dynamic current environment," said
interim President Charles
Tyson. "Following state and local orders, we have
implemented flexible operating models and robust safety measures in
our stores and have temporarily closed our corporate office and
call center and are operating effectively from remote
locations. We have also taken appropriate steps to preserve
liquidity by reducing costs, managing inventory flow, deferring
payments, and working with our lenders to temporarily expand our
credit facility as we adapt to the evolving landscape."
Update on Preliminary Unaudited First Quarter 2020 Results
(quarter ended March 31,
2020)
Through the week ending March 21,
2020, the Company's quarter-to-date comparable store sales
increased approximately 4%, but as the impact of COVID-19 began to
broadly impact consumers, orders declined significantly and first
quarter comparable stores sales eroded to approximately negative 1%
by the end of the quarter. Despite softening sales in late
March, gross margin percent increased in the quarter versus first
quarter last year driven by margin optimization and supply chain
efficiency efforts. In addition, rigorous expense management
helped deliver a year-over-year reduction in adjusted SG&A as a
percent of sales in the quarter.
The Company intends to utilize the Securities and Exchange
Commission's extended filing deadline for its first quarter
earnings report and Form 10-Q as relevant resources have been
focused on responding to the COVID-19 crisis. In addition,
the Company continues to evaluate the CARES Act and any potential
impact on reported results. As a result, the Company
currently anticipates filing its first quarter earnings report and
Form 10-Q the week of May 25,
2020.
Due to the ongoing uncertainty created by COVID-19, the Company
is withdrawing its annual 2020 financial guidance that was provided
on February 25, 2020.
Business Update
The Company remains committed to serving its customers while
keeping health and safety paramount. Aligning with these
priorities, the Company is executing a variety of flexible
operating models that utilize safety measures such as personal
protective equipment for employees and allow for contact-free
engagement. Many stores are operating as warehouse-only,
offering curbside pickup and home or jobsite delivery
options. At this point in time, in compliance with local and
state regulatory orders, the Company is providing customers with
product from all but 20 of its 420 stores. All stores are
temporarily operating under reduced hours and closed on
Sundays.
In addition, the Company is leveraging its strategic investments
in digital capabilities made over the past 18 months, including the
Floor Finder and Picture It! tools, to serve customers at
LLFlooring.com. Web traffic has increased meaningfully in
recent weeks, and adapting to the change in consumer behaviors, the
Company is currently offering free online flooring samples,
extended hours for voice and click-to-chat customer support,
curbside store pickup and enhanced home delivery options.
Finally, store managers are proactively engaging with Pro
customers to continue to meet their unique needs by offering
expanded phone and online access and providing convenient pickup
and delivery options. To provide flexibility for both our Pro
and DIY customers, the Company has extended its return policy an
additional 60 days.
As a result of reduced demand and the changes in the current
operating model related to COVID-19, the Company made the difficult
decision to temporarily furlough approximately 300 store associates
and reduce operating hours in its distribution centers.
Impacted employees will receive two weeks of pay and have the
opportunity to utilize up to 80 hours of paid time off. In
addition, the Company will pay the employee portion of benefit
premiums for any employee impacted beyond four weeks through the
end of May 2020.
The Company is implementing a range of other measures to
increase financial flexibility and maintain agility during this
challenging time. These measures include reducing costs,
managing inventory flow, deferring payments, and delaying or
stopping non-critical projects such as pausing the planned opening
of certain new stores and reducing capital spending.
The Company is also implementing a temporary reduction in all
salaried employee compensation including a 25% reduction in the
base pay of the interim President, the Chief Financial Officer and
other C-level executives, and a corresponding 30% reduction in the
cash compensation of the Board of Directors.
Credit Facility Expansion and Enhanced Liquidity
On April 17, the Company reached
agreement with its lenders to amend its Senior Secured Credit
Facilities. While the Facilities maturity remains
March 2024, the amendment is
effective through August 30, 2020 and
provides:
- An increase in the senior asset-based revolving credit facility
from $175 million to $212.5 million which increases the total
availability under the Senior Secured Credit Facilities from
$200 million to $237.5 million, subject to the borrowing base
calculation
- An increased advance rate against inventory under the borrowing
base
- Additional terms and conditions can be found in the Company's
April 20, 2020 Form 8-K filing with
the Securities and Exchange Commission.
This amendment, in addition to the steps described in the
Business Update, provides meaningful incremental liquidity to aid
in weathering COVID-19-related challenges.
The Company augmented its cash balance by borrowing $37 million under the amended ABL facility, and
as of April 17, the Company had
liquidity of approximately $120
million including approximately $41
million in cash and cash equivalents.
Key Strategic Initiatives
While near-term flexibility dominates current priorities, the
Company continues to execute key strategic initiatives to position
for recovery. This includes continuing to build out its
enhanced web platform, evolve its brand and deliver an enhanced
experience for its Pro and DIY customers. Through these
efforts, the Company expects to drive traffic and transactions in
stores and online and improve profitability over time.
"I would like to thank our employees, customers, vendors and
other stakeholders for their ongoing support," Tyson
concluded. "I am confident in our teams' ability to persevere
during these challenging times, and I am proud of how our stores,
distribution facilities, contact and support centers and the
corporate office have come together in response to this
pandemic. They have demonstrated creativity, collaboration
and caring as we continue to safely serve our customers."
About Lumber Liquidators
Lumber Liquidators is one of North America's leading specialty
retailers of hard-surface flooring with 419 stores as of
December 31, 2019. The Company
features more than 400 varieties of floors in the latest
styles, including waterproof vinyl plank, solid and engineered
hardwood, laminate, bamboo, porcelain tile and cork flooring.
Additionally, Lumber Liquidators provides a wide selection of
flooring enhancements and accessories to complement, install and
maintain new floors. Every location is staffed with flooring
experts who can provide advice, pro services and installation
options for all of Lumber Liquidators' products, much of which is
in stock and ready for delivery.
Learn more about Lumber Liquidators:
- Commitment to compliance, quality and the communities it
serves: https://www.lumberliquidators.com/quality.
- Corporate giving: LayItForward.LumberLiquidators.com.
- Follow on social media: Facebook, Instagram and Twitter.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This press release includes statements of the Company's
expectations, intentions, plans and beliefs that constitute
"forward-looking statements" within the meanings of the Private
Securities Litigation Reform Act of 1995. These statements, which
may be identified by words such as "may," "will," "should,"
"expects," "intends," "plans," "anticipates," "believes," "thinks,"
"estimates," "seeks," "predicts," "could," "projects," "potential"
and other similar terms and phrases, are based on the beliefs of
the Company's management, as well as assumptions made by, and
information currently available to, the Company's management as of
the date of such statements. These statements are subject to risks
and uncertainties, all of which are difficult to predict and many
of which are beyond the Company's control. These risks include,
without limitation, the impact on us of any of the following:
- obligations related to and impacts of new laws and regulations,
including pertaining to tariffs and exemptions;
- the outcomes of legal proceedings, and the related impact on
liquidity;
- reputational harm;
- obtaining products from abroad, including the effects of
pandemic, including COVID-19, and tariffs, as well as the effects
of antidumping and countervailing duties;
- disruption to our business resulting from the COVID-19
pandemic
- obligations under various settlement agreements and other
compliance matters;
- disruption due to cybersecurity threats, including any impacts
from a network security incident;
- inability to open new stores, find suitable locations for our
new store concept, and fund other capital expenditures;
- inability to execute on our key initiatives or such key
initiatives do not yield desired results;
- managing growth;
- transportation costs;
- damage to our assets;
- disruption in our ability to distribute our products, including
due to disruptions from the impacts of severe weather;
- operating stores in Canada and
an office in China;
- managing third-party installers and product delivery
companies;
- renewing store, warehouse, or other corporate leases;
- having sufficient suppliers;
- our, and our suppliers', compliance with complex and evolving
rules, regulations, and laws at the federal, state, and local
level;
- disruption in our ability to obtain products from our
suppliers;
- product liability claims;
- availability of suitable hardwood, including due to disruptions
from the impacts of severe weather;
- changes in economic conditions, both domestic and abroad;
- sufficient insurance coverage, including cybersecurity
insurance;
- access to and costs of capital;
- the handling of confidential customer information, including
the impacts from the California Consumer Privacy Act;
- management information systems disruptions;
- alternative e-commerce offerings;
- our advertising and overall marketing strategy;
- anticipating consumer trends;
- competition;
- impact of changes in accounting guidance, including the
implementation guidelines and interpretations;
- maintenance of valuation allowances on deferred tax assets and
the impacts thereof;
- internal controls;
- stock price volatility; and
- anti-takeover provisions.
The Company specifically disclaims any obligation to update
these statements, which speak only as of the dates on which such
statements are made, except as may be required under the federal
securities laws. Information regarding these and other
additional risks and uncertainties is contained in the Company's
other reports filed with the Securities and Exchange Commission,
including the Item 1A, "Risk Factors," section of the Form 10-K for
the year ended December 31, 2019.
Non-GAAP and Other Information
To supplement the financial measures prepared in accordance with
U.S. generally accepted accounting principles (GAAP), the Company
uses Adjusted SG&A as a percentage of net sales. This
non-GAAP financial measure should be viewed in addition to, and not
in lieu of, financial measures calculated in accordance with
GAAP. This supplemental measure may vary from, and may not be
comparable to, similarly titled measures by other companies.
The non-GAAP financial measure is presented because management
uses this non-GAAP financial measure to evaluate the Company's
operating performance and, in certain cases, to determine incentive
compensation. Therefore, the Company believes that the presentation
of non-GAAP financial measures provides useful supplementary
information to, and facilitates additional analysis by, investors.
The presented non-GAAP financial measures exclude items that
management does not believe reflect the Company's core operating
performance, which include regulatory and legal settlements and
associated legal and operating costs, as such items are outside the
control of the Company or are due to their inherent unusual,
non-operating, unpredictable, non-recurring or non-cash nature.
For further information contact:
Lumber Liquidators Investor Relations
ir@lumberliquidators.com
Tel: 804-420-9801
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SOURCE Lumber Liquidators