LL Flooring Holdings' Q1 2024 net sales of $188.5 million decreased $52.2 million, or 21.7%, versus the Q1 2023, driven by lower transaction counts and average ticket size in both the Pro and Consumer channels as a result of continued headwinds from the difficult macroeconomic environment and ongoing brand awareness challenges.
Gross margin increased 120 basis points to 37.8% and adjusted gross margin decreased 40 basis points to 37.1% compared to the Q1 2023. The increase in gross margin was primarily driven by vinyl cost recoveries associated with Uyghur Forced Labor Prevention Act ("UFLPA"), lower transportation costs as inbound container costs have come down, partially offset by higher vinyl sourcing costs as we increased sourcing from domestic vendors and lower average selling price due to challenges with industry driven pricing pressure. The decrease in adjusted gross margin is primarily driven by lower average selling price due to challenges with industry driven pricing pressures.
Q1 2024 operating margin loss was 14.5% compared to an operating margin loss of 5.5% in the Q1 of last year. Adjusted operating margin loss was 15.2% compared to an adjusted operating margin loss of 4.5% in the Q1 2023.
"Q1 business conditions remain difficult as we continue to experience the impact of weaker home sales, elevated interest rates and inflation, which have led to softness in home improvement, remodel and big ticket discretionary spending. We reported comparable store sales down 21.5% as we saw continued declines in traffic and lower average project sizes from 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, "The challenging macroeconomic factors have pushed home improvement spend per housing unit below its 50-year average, impacting the remodel industry. The leading indicators continue to predict that spending on remodel activity will remain challenged through the full year. However, the long-term tailwinds regarding home improvement spending remain driven by aging housing stock, increased household formation and rising home values. To that end, we remain focused on executing on our strategic initiatives that we believe will have LL Flooring well positioned in the marketplace when the cycle for home improvement spending normalizes."
LL Flooring is one of the country’s leading specialty retailers of hard-surface flooring with 435 stores nationwide.
