LL Flooring Holdings' Q4 2023 net sales decreased 19.7% to $211.8 million compared to the same period last year, driven by a decrease in transaction count and average transaction size reflecting lower spend by consumers and Pros.
Q4 2023 gross margin increased 270 basis points to 38.6% and Adjusted gross margin increased 260 basis points to 38.3% compared to the same period last year, primarily driven by vendor cost outs and lower transportation costs, partially offset by headwinds from higher vinyl sourcing costs as we increased sourcing from domestic vendors.
Q4 2023 operating margin loss increased 170 basis points to 8.3% compared to the Q4 2022. Adjusted operating margin loss increased 550 basis points to 8.6% compared to the Q4 2022.
"Q4 business conditions remain difficult as we continue to experience the impact of weakness in existing home sales and the corresponding softness in the home improvement industry. We reported comparable store sales down 19.6% as we saw continued declines in traffic and lower average project sizes for our consumer and pro customers. Despite external headwinds, we are focused on our ability to deliver the high-touch service of an independent flooring retailer combined with the value, assortment, and convenience of a national brand,” said President and CEO Charles Tyson.
Tyson continued "Leading economic indicators suggest that home improvement spending will continue to be challenged through at least the first half of 2024, however, the long-term fundamentals of our business are strong due to aging housing stock, increased household formation and rising home values. To that end, we remain focused on executing on our brand transformation and on our strategic initiatives which we believe will drive revenue growth, increase brand awareness, spur product innovation and deliver a consistent customer experience. We are also gaining traction on several of our operating strategies, focusing on the customer experience, driving and improving NPS scores, innovating products including the execution of our carpet initiatives, and maintaining a strong focus on improving operational efficiencies and working capital management. All of which, gives us confidence in achieving long-term growth.”
Full Year 2023 Financial Highlights
Net sales decreased 18.5% to $904.7 million compared to last year, driven by a decrease in transaction count and average transaction size reflecting lower spend by consumers and Pros.
Gross margin decreased 40 basis points to 35.7% compared to 2022 and Adjusted gross margin increased 140 basis points to 37.5% compared to 2022. Gross margin decreased due to unfavorable antidumping duty rate changes and customs detentions on certain vinyl flooring products from Asia. The increase in adjusted gross margin was primarily due to lower vendor and transportation costs.
Operating margin loss increased 780 basis points to 8.9% compared to last year. Adjusted operating margin loss increased 680 basis points to 7.0% compared to last year.
LL Flooring Holdings, Inc. is a leading specialty retailer of hard and soft surface flooring in the U.S.
