LL Flooring Holdings, Inc. announced financial results for the quarter ended June 30, 2023. Net sales of $236.4 million decreased $62.5 million, or 20.9%, versus the Q2 2022, driven by a decrease in transaction count reflecting by lower spending by consumers and Pros.
Q2 2023 gross profit decreased 20.8% and gross margin of 35.8% increased 10 basis points.
Q2 2023 adjusted gross profitof $86.9 million decreased $21.1 million and adjusted gross margin of 36.7% increased 60 basis points. The decreases in both gross profit and adjusted gross profit are driven by a decrease in transaction count reflecting lower spending by Pros and consumers, while the increase in gross margin and adjusted gross margin reflects the Company's ability to offset higher material and transportation costs (collectively up more than 400 basis points) through pricing, promotion, and alternative country/vendor sourcing strategies.
Q2 2023 operating margin of (8.7)% decreased 1,030 basis points compared to the second quarter of last year. Adjusted operating margin of (7.5)% decreased 880 basis points compared to the Q2 of last year.
President and CEO Charles Tyson said: "Our Q2 performance primarily reflected the continued impact of the difficult macro backdrop that has impacted big ticket discretionary purchases as well as the demand for home remodeling projects. We also continued to experience pressure from low brand awareness as we continue on our transition to LL Flooring. We are actively pursuing operational opportunities to improve our performance including 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 intently working to reduce costs while focusing investments on our top growth priorities."
Tyson concluded, “As we look to the second half of 2023, we expect the challenging macro environment to persist, continuing to limit sales visibility. As a result, we will focus to operate the business with discipline from an expense and capital management standpoint, including further leveraging our inventory management practices to yield continued improvements in our overall working capital. This, combined with the strength of our balance sheet, and the work we are doing on our initiatives give us confidence that we will return to growth and drive long-term shareholder value."
LL Flooring Holdings, Inc. is a leading specialty retailer of hard-surface flooring in the U.S.
