FINANCE

Lumber Liquidator woes continue in Q4

BY HBSDealer Staff

Things were worse than expected for Lumber Liquidators in the fourth quarter, which experienced decreased customer activity that was likely due to cancer-related concerns over its laminate flooring.

Net sales for the quarter ended Dec. 31, 2015 were down 13.7% year-over-year to $234.8 million, including a comparable store net sales decline of 17.2% that was based on a 15.6% decrease in customer count and a 1.6% decrease in the average sale.

However, non-comparable store net sales increased $9.6 million over the comparable prior year period.

The company also went into the red during the quarter, with a net loss of $19.8 million comparing to a net income of $17.3 million in the year-ago period.

Gross margin was down to 23.0% from 39.2% in the prior-year period, owing to its $22.2 million reduction in the carrying value of its China-sourced laminate flooring.

"Over the past quarter we have taken meaningful steps to reestablish Lumber Liquidators with our customers and our shareholders," said CEO John Presley. "While we have made some progress in key areas such as compliance and core operational efficiency, we still have a long way to go. That said, our business model is intact, we are addressing legacy issues with clarity and candor, and we are rebuilding our brand."

For the full-year fiscal period, net sales were down 6.6% to $978.8 million, with comparable store net sales down 11.1%. A net loss of $56.4 million compared unfavorably to a net income of $63.4 million in 2014.

"As we begin 2016, we are focused on four main areas that we believe will provide a strong foundation for Lumber Liquidators," added Presley. "First, we will concentrate on store performance and execution. Second, we will strengthen our value proposition to customers. Third, we will continue to enhance our vigilance surrounding responsible and compliant sourcing. Finally, we will opportunistically expand our business to better serve our customers. We believe that if we execute on these areas with excellence and integrity, we will build a stronger Lumber Liquidators for our customers, our employees and our shareholders."

Lumber Liquidators also announced the appointment of Dennis Knowles as COO, effective March 1, 2016.

Knowles has more than 25 years of leadership experience in store and business operations, most recently serving as COO at Lowe's, where he oversaw the omnichannel operations of more than 1,700 Lowe's stores across the country.

"I am excited to be joining Lumber Liquidators," said Knowles. "This is a pivotal time for the company to refocus our efforts on elevating store performance, underscore our commitment to customer service and enhance the quality and diversity of our product offering. I look forward to working with the entire senior management team as well as our store managers and associates to position Lumber Liquidators for success in the years to come."

"We are extremely pleased to welcome someone of Dennis' caliber to our senior leadership team, particularly as we focus on strengthening our value proposition and the performance of our store network across North America," said Presley. "Dennis' mix of retail, leadership and business experience is uniquely suited for Lumber Liquidators and is an ideal complement to our leadership team. We look forward to benefitting from his contributions and leveraging his store operations and home improvement expertise to deliver quality service to our customers and drive value for our stakeholders."

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Five Innovations Transforming How Consumers Shop on Mobile

BY Nitin Mangtani

The abandoned shopping cart rate for mobile shoppers approximates an astounding 97%, according to some estimates. Clearly, this hair-raising stat proves consumers’ deep disappointment with mobile commerce.

These cumbersome mobile shopping experiences only deliver a quarter of the conversion rates of e-commerce websites, and retailers are losing billions of dollars in potential sales every year. It’s what comScore refers to as the “M-Commerce Gap”: mobile devices account for almost 60 percent of digital shopping time, but only for 15% of e-commerce spending.

I believe this is often a result of issues associated with a retailer’s mobile site design, many of which are merely scaled down versions of their desktop sites. When traffic was limited, this was an efficient approach for serving mobile visitors. But with mobile devices now an integral part of our daily lives and mobile traffic greater than 60%, we need to raise the bar on mobile commerce experience.

For far too long, consumers have been left frustrated by mobile pages that take 4 – 6 seconds to load and tedious checkout processes with multiple forms that are a hassle to fill out on mobile devices. As consumers become increasingly accustomed to super fast and easy purchasing experiences like Instagram Pinterest, Amazon, Uber and Cole Haan, the bar for retailers inevitably rises.

But make no mistake: this is all about to change. 2016 is poised to be a transformative year for mobile shopping. From digital wallets and app indexing, to larger screens and buy buttons, a number of recent mobile innovations will be converting smartphone-armed shoppers from mobile browsers to mobile buyers.

1. Digital wallets
With new mobile payment services like Apple Pay and Android Pay, gone are the days when consumers had to fill in complex forms in small screens to complete transactions. Mobile shoppers can now complete purchases with a single taps on their screens, a quantum leap in convenience that will make buying from a smartphone an experience that’s not only faster but also more enjoyable.

2. Improved mobile app discovery
Discovering mobile apps hasn’t been intuitive for shoppers, but now, thanks to App Indexing and App Deep Linking efforts from major industry players, mobile commerce apps and their inventories are much easier to find. Consumers now have a clearer view of the universe of m-commerce apps available to them, opening up much better shopping options than going to mobile sites on their smartphones’ browsers.

Until recently, storage capacity in smartphones was limited, and users balked at downloading apps due to capacity concerns. Now, with smartphones that can pack 128 GB of storage, such as the iPhone 6s, this is no longer an issue, and consumers feel free to install as many shopping apps as they wish and need. The larger, better screens have boosted consumers’ capacity to evaluate product photos, read their descriptions, check out reviews and compare features and prices.

3. Phones with bigger screens and more storage
Until recently, storage capacity in smartphones was limited, and users balked at downloading apps due to capacity concerns. Now, with smartphones that can pack 128 GB of storage, such as the iPhone 6s, this is no longer an issue, and consumers feel free to install as many shopping apps as they wish and need.

The larger, better screens have boosted consumers’ capacity to evaluate product photos, read their descriptions, check out reviews and compare features and prices.

4. Social commerce: Buy buttons
Twitter, Google, Facebook, and Pinterest have added “buy” buttons to their apps, marrying social, search and shopping on smartphones and tablets. This development will benefit brands and consumers: a third of mobile shoppers say social media stores motivate them to buy online, according to a recent report from Global Web Index. Suddenly, consumers will be able to mix their online social interactions with commerce, acting on friend’s recommendations or personal discoveries right within the interface and context of their social app.

5. Native mobile apps that leverage core iPhone and Android features
Leading retailers and brands have realized that to deliver a top-notch mobile shopping experience they need native, dynamic m-commerce apps that, unlike mobile sites, can take advantage of the features of iOS and Android, such as Apple Pay, 3D Touch Visual Search, Barcode Scanning, Sending Push and Geo-Fence notifications, and TouchID.

Engagement on native mobile apps is 10 to 15 times higher than on mobile commerce sites, conversions on native mobile apps are three to four times higher than m-sites, studies show. A mobile web page takes six to eight seconds to load, glacial speed when compared with native mobile apps and their response times measured in hundreds of milliseconds.

And the trend-setting millennials love m-commerce apps. A recent survey from visual marketing firm Pixlee found that almost 50 percent of respondents had downloaded a mobile shopping app to their phones because they find them superior to mobile sites.

The time for m-commerce is now
Smartphones have been our constant companions for many years, but they have proven less than useful as shopping tools. This is the time when that changes. 2016 is the year of mobile commerce.



Nitin Mangtani is founder and CEO of PredictSpring, which offers an innovative technology platform that dramatically improves and simplifies the way consumers shop on mobile phones. Follow Nitin on Twitter at @nitin_mangtani.

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FINANCE

Shoppers Drug Mart posts Q4 same-store sales lift of 5%

BY Michael Johnsen

Loblaw on Thursday posted $33.6 billion in revenue for its year ended Jan. 2, a 6.5% lift with one week less of sales – Loblaw's fiscal 2015 represents 52 weeks while fiscal 2014 represents 53 weeks.

"I am pleased to report that we continued to deliver against our financial plan in the fourth quarter," stated Galen Weston, executive chairman and president, Loblaw. "The company continues to execute on its strategic framework and purpose of Live Life Well – consistently delivering the best in food, best in health and beauty, operational excellence and growth. Our relentless focus on this framework has positioned us to achieve our financial plan amidst a competitive environment and continued pressures from healthcare reform."

For the fourth quarter, Loblaw's retail pharmacy arm Shoppers Drug Mart realized same-store sales growth of 5%, with same-store pharmacy sales increasing by 4.2% and same-store front-store sales increasing by 5.7%.

Total sales across Shoppers Drug Mart for the quarter were $2.2 billion, with $972.5 million in pharmacy sales and $1.2 billion in front-end sales.

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