Trend watch: more favorable indicators of housing health

Flooring specialist Lumber Liquidators reported a 14.9% second quarter same store sales increase and became the latest company to benefit from a resurgent housing and home improvement market.

Lumber Liquidators, operator of 300 stores, said total sales increased 22.2% to $257.1 million from $210.3 million during the second quarter ended June 30. Gross margins expanded to 41.3% from 37.3%, reflective of a reduced sourcing costs, higher prices and improved operational efficiencies, which translated to significant profit growth. Net income surged 67.7% to $20.4 million.

Lumber Liquidator’s president and CEO, Robert Lynch, characterized the results and record operating margin rate as outstanding and promised more of the same in the second half of the year with a comp increase in the upper single digit to low double digit range.

The retailer’s sales results were announced the same day that the U.S. Commerce Department reported June sales of new homes grew by 8.3% to an annualized pace of 497,000 units, the highest level in five years.

As more consumers and contractors were installing flooring products during the April, May and June time frame, they were also doing a lot more painting judging from the results of industry leader Sherwin-Williams. The operator of more than 4,000 paint stores last week said its paint stores group produced a second quarter comp increase of 7%.

Another indicator of the health of the consumer came courtesy of global appliance leader Whirlpool. It also reported stellar second quarter financial results last week. Whirlpool’s sales increased to $4.7 billion from $4.5 billion and operating profits swelled to $328 million from $194 million. North American sales increase by $100 million to $2.6 billion.

"Sales increased in every region of the world as we continued to expand margins," said Jeff Fettig, Whirlpool’s chairman and CEO. "Our financial results reflect increased demand for our innovative products and continued benefits from our margin expansion actions."

The company also raised its full year outlook.