Lumber Liquidators Tumbles to 2008 Levels as Tariffs Bite Harder

(Bloomberg) -- Lumber Liquidators Holdings Inc. plunged as much as 20%, touching its lowest level since 2008, after the hardwood flooring retailer said sales are slowing amid China tariffs.

The Toano, Virginia-based company projects that comparable-store sales -- a key measure of retail success -- will be flat for the year, down from a previous range of flat to low-single digit growth. Lumber Liquidators executives said they are working to diversify their source countries due to the 25% tariff on the products it imports from China.

The company currently gets about 50% of its imports from China, and hopes to reduce that to the mid-forties by the end of the year. On a call with investors, executives predicted the levies would lead to price increases across the flooring industry in the second half of 2019.

Chief Executive Officer Dennis Knowles said the company is looking for areas to reduce costs to offset the tariffs, which rose to 25% in June after an initial 10% levy went into effect last year.

“They’re going to do what they can to mitigate those challenges, but they’ll have to raise prices in stores, and how that meets with consumer demand is to be determined,” Rick Nelson, a managing director at Stephens Inc., said in a telephone interview. “Retailers that struggle with same-store sales growth have been punished in the market, and Lumber Liquidators is no exception.”

Shares dropped as much as 20% to $6.59 in New York on Wednesday, the lowest intraday level in more than 11 years.

To contact the reporter on this story: Joe Deaux in New York at jdeaux@bloomberg.net

To contact the editors responsible for this story: Anne Riley Moffat at ariley17@bloomberg.net, Jonathan Roeder

©2019 Bloomberg L.P.