Can New CEO Save Lumber Liquidators?

(RTTNews) - Lumber Liquidators Holdings Inc. (LL) on Wednesday named John Presley as its chief executive officer and also reported a loss for the third quarter on lower sales, as the hardwood-flooring company continues to struggle amid concerns about the safety of its products.

Presley's appointment as CEO of Lumber Liquidators is effective November 16. He succeeds Thomas Sullivan, the company's founder, who has served as acting CEO since May 21, 2015. Sullivan will serve as special advisor to the CEO and remain on the board as Founder.

Presley joined Lumber Liquidators as a director in April 2006 and was appointed chairman of the board in May 2015. He has more than 30 years of leadership experience. Presley most recently served as CEO of First Capital Bancorp since October 2008.

Presley's appointment comes six months after Robert Lynch resigned as the CEO of Lumber Liquidators in May amid allegations about cancer-causing formaldehyde in the company's flooring products.

Lumber Liquidators' image was tarnished after a "60 Minutes" segment aired on CBS in March this year found that flooring manufactured in China and sold by the company contained levels of formaldehyde that may not meet health and safety standards of California.

The report triggered a fall in the company's share price and also led to falling sales, lawsuits and the departure of some senior executives.

On Wednesday, Lumber Liquidators also reported a net loss for the third quarter of $8.5 million or $0.31 per share, compared to net income of $15.7 million or $0.58 per share in the year-ago period.

Net sales for the quarter declined 11.3 percent from the year-ago period to $236.1 million. It includes a comparable store net sales decline of 14.6 percent due to a 13 percent decrease in the number of customers invoiced and a 1.6 percent decrease in the average sale.

According to the company, net sales were negatively impacted by unfavorable allegations surrounding the product quality of its laminates sourced from China which weakened demand for all merchandise categories, with laminates and bamboo impacted the most. The company also believes the decrease in net sales was partly due to suspension of its sales of all laminate flooring sourced from China.