LL Flooring Holdings, Inc.

Q1 net sales were $188.5 million, down 21.7% year over year; comparable sales declined 21.5%, driven by an 18.5% drop in comp transactions and a 3% decline in average ticket. Gross profit was $71.2 million, down 19.1%, and gross margin was 37.8%, up 120 basis points; adjusted gross margin was 37.1%, down 40 basis points. Operating loss was $27.4 million versus $13.2 million a year ago, and adjusted operating loss was $28.7 million versus $10.8 million last year. Inventories declined $59 million, or 19%, year over year; liquidity ended at $63.3 million, including $6 million in cash and $57.3 million of revolver availability. Management did not provide specific earnings guidance, but said full-year revenue will continue to be challenged, gross margin should benefit from lower transportation costs partly offset by higher vinyl sourcing costs and some reinvestment into pricing, and 2024 capital expenditures are expected to be about $30 million.

Charles Tyson framed the quarter as difficult but emphasized that LL Flooring is actively responding with strategic and operational changes. He highlighted improving Pro selling, CRM-driven customer engagement, better digital capabilities, carpet expansion, and stronger execution in the West, while also noting that low brand awareness remains a headwind. His tone was urgent but optimistic, repeatedly stressing that the company is attacking both cost and sales opportunities and believes it will be better positioned when the housing/remodel cycle normalizes.

Bob Madore focused on the earnings pressure from lower sales volumes and the company’s response on costs, inventory, and liquidity. He said adjusted SG&A was $98.6 million, quarter-to-date SG&A reductions totaled approximately $4 million, and the company realized just under $5 million of savings from initiatives in the quarter. On the balance sheet, he cited $63.3 million of liquidity at quarter-end, $89 million outstanding on the revolver, and a $54.9 million decline in liquidity from year-end due mainly to a lower borrowing base. He also said the company is pursuing a sale-leaseback of its approximately 1 million square foot Sandston, Virginia distribution center, has retained Houlihan Lokey on financing alternatives, and is lowering 2024 capex to about $30 million.

An analyst asked how much more SG&A could reasonably be reduced and what sales level would be needed for profitability. Management replied that it achieved over $2 million of net SG&A reduction year over year in Q1, had nearly $5 million of savings from initiatives, and sees a similar rate of reduction ahead. On profitability, Bob Madore said roughly $930 million to $1 billion of sales would be needed with the current infrastructure, while Charles Tyson argued the company still has room to grow revenue through carpet expansion, CRM-driven Pro relationships, product/category initiatives, and national accounts.