Lumber Liquidators Holdings (LL) reported a bigger-than-expected drop in sales for the third straight quarter as it struggles to revive demand following a report that some of its flooring laminates contained excessive levels of cancer-causing formaldehyde.
Shares cratered about 8% Monday in pre-market trading.
The company on Monday also named Dennis Knowles, a former executive of home improvement chain Lowe’s (LOW), as its chief operating officer, filling a position that has remained vacant since 2012.
Lumber Liquidators’ last COO was Robert Lynch, who became CEO in 2012 but resigned last May following the scandal related to its China laminates.
The company’s stock and sales have been hammered since a 60 Minutes report on CBS last March said the retailer’s laminates from China contained excessive levels of formaldehyde.
Lumber Liquidators got some breathing space in early February after U.S. federal tests found a low risk of cancer from some of the company’s laminate flooring.
But that was short lived, as two weeks later the report was revised to say the risk of cancer was three times higher than previously estimated.
Lumber Liquidators said on Monday there was a decrease in both the number of customers it billed and the average sale value in the fourth quarter ended Dec. 31.
Sales at Lumber Liquidators’ stores open more than 12 months fell 17.2% in the quarter, steeper than the 12% drop expected by analysts polled by research firm Consensus Metrix.
Net sales fell 13.7% to $234.8 million, coming in below analysts’ average estimate of $254.5 million, according to Thomson Reuters I/B/E/S.
Sales had fallen 11.3% and 5.8% in the third and second quarters, respectively.
The company reported a net loss of $19.8 million, or 73 cents per share, in the latest quarter, compared with a profit of $17.3 million, or 64 cents per share, a year earlier.
Lumber Liquidators’ costs jumped due to higher legal expenses and a fall in the carrying value of the laminates it sourced from China, which it decided not to sell.
Up to Friday’s close, Lumber Liquidators shares had lost 84% of their value since Feb. 24, the day before the company said CBS was going to air the allegations.