LL Flooring, a leading specialty retailer of hard-surface flooring in the United States, announced net sales decreased 13.7% to $240.7 million for the first quarter ended March 31, 2023, compared to the same period last year, driven by lower spending by consumers versus last year combined with a decline in pro sales.
Total comparable store sales decreased 15.4% versus the same period last year. Gross margin of 36.6% decreased 70 basis points as a percentage of sales, driven by $2.1 million in incremental costs related to customs delays on flooring products that contain PVC as a consequence of the UFLPA.
“As expected, the first quarter was very challenging and our performance reflected the impact the difficult macro backdrop had on discretionary home improvement spending," said President and Chief Executive Officer Charles Tyson. "In addition, we continue to experience pressure from brand awareness and operational challenges that impacted first quarter results. Despite the near-term volatility, we remain focused on areas of improvement that will help stabilize our results and drive long-term growth opportunities. These include further broadening and growing our brand awareness among consumers to drive traffic; ensuring a consistent customer experience across our omnichannel network to improve conversion; and improving operating efficiencies by actively working to reduce costs while focusing investments on our top growth priorities."
Tyson reported that the company continues to execute on its strategic initiatives of growing sales to pro customers, building brand awareness, improving the customer experience and innovating new products. Additionally, in response to customer feedback, LL Flooring has launched a new category pilot in carpet in four stores with plans to be in 20 additional stores by the end of the second quarter as we serve as the comprehensive flooring solution provider for our customers. the company also said it plans to open a third distribution center in Dallas in the third quarter.
Looking ahead, Tyson said the company expect the macro backdrop to remain challenging as elevated inflation and higher interest rates drive a more cautious consumer and pressure higher ticket discretionary purchases.
"We have also been impacted by the enforcement of the Uyghur Forced Labor Prevention Act ("UFLPA") as it relates to the importation of polyvinyl chloride (PVC) which is resulting in delays in receipt of certain vinyl flooring products," he added. "We are diligently working to provide the additional documentation that has been requested by U.S. Customs. During Q1, we experienced continued delays, incremental expenses and lost sales as a result of detention notices within the vinyl product category."
