Lumber Liquidators announced financial results for the first quarter ended March 31, 2015. Net sales were $260 million, an increase of 5.6% from Q1 2014 and a compound annual growth rate of 6.2% over Q1 2013.
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Net sales in the month of March 2015 were $89.4 million, a decrease of 12.8% in comparison to March 2014. Net sales trends in March 2015 were significantly weaker than trends in January and February 2015, as net sales were negatively impacted by unfavorable allegations surrounding the product quality of the Company's laminates sourced from China.
The Company opened four new stores during the first quarter of 2015 and was operating 356 locations at March 31, 2015.
In comparable stores, net sales for the quarter decreased 1.8% in comparison to the first quarter of 2014, due to a 6.2% decrease in the average sale, partially offset by a 4.4% increase in the number of customers invoiced. In the month of March 2015, net sales at comparable stores decreased 17.8% due to a 6.5% decrease in the average sale and an 11.3% decrease in the number of customers invoiced.
Gross margin was 35.2% in the first quarter of 2015 including approximately $1.6 million, or 62 basis points, in incremental transportation expenses incurred in conjunction with the consolidation and transition of the East Coast distribution center.
Gross margin also included approximately $2.3 million, or 88 basis points, in costs related to the ongoing indoor air quality testing program provided to certain of the Company's customers comprised of approximately $1.8 million incurred for the testing program and an increase of $0.5 million for estimated future customer service costs. Gross margin in the first quarter of 2014 was 41.1%.
In comparison to 2014, gross margin was also adversely impacted by certain planned changes in the marketing of the Company's value proposition, which occurred prior to March, and greater promotional pricing in March to drive customer traffic.
Selling, general and administrative (SG&A) expenses in the first quarter of 2015 increased $18.6 million, or 23.6%, from the first quarter of 2014 to $97.4 million primarily due to a $10 million non-deductible accrual for a regulatory matter, a $3.3 million increase in legal and professional fees and $1.1 million of incremental expenses to complete the consolidation and transition of the East Coast distribution center.
SG&A expenses were 37.5% of net sales in the first quarter of 2015, compared to 32.0% of net sales in the first quarter of 2014.
Net loss was $7.8 million, or a loss of $0.29 per diluted share, in the first quarter of 2015 and net income was $13.7 million, or $0.49 per diluted share, in the first quarter of 2014. ■