Dive Brief:

• Embattled flooring retailer Lumber Liquidators saw its shares tumble close to 8% in afternoon trading Tuesday after reporting a sales slump even worse than analysts had expected.  

• Lumber Liquidators' Q1 sales fell 10.2%, their fourth straight quarterly decline, and Q1 same-store sales dropped 13.9%. Analysts estimated same-store declines closer to 12.6%, according to research firm Consensus Metrix.

• Lumber Liquidators' Q1 net loss was  $32.4 million, or $1.20 per share, compared to $7.8 million, or 29 cents per share, a year ago. Thomas Reuters analysts estimated a loss of about 24 cents per share on revenue of $237 million. 

Dive Insight:

The situation at Lumber Liquidators remains fairly dire a year after CBS television's '60 Minutes' reported that certain laminate flooring products sold by the retailer emit toxic levels of formaldehyde, a known carcinogen and a chemical that can exacerbate respiratory issues.

Once a darling among investors, Lumber Liquidators since then has suffered a series of setbacks. The Centers for Disease Control and Prevention reported that the cancer risks from the flooring were even worse than feared, leading to scrutiny from regulators and lawmakers along with shareholder and consumer lawsuits.

Lumber Liquidators says it has boosted its quality-control measures, and suspended sales of Chinese laminates and offered free air tests to customers. But it's still facing a load of costs and public relations flak. The company took more than two months to halt sales of suspect products last year, for example, and pled guilty to charges of making false declarations on import documents, paying millions in a settlement. Lumber Liquidators also has been forced to offer significant price cuts in its effort to attract customers.

Lumber Liquidators said Tuesday that it reached an agreement to pay $26 million and 1 million shares through its insurers to settle a securities class action lawsuit. In March, the company also reached a $2.5 million settlement with the California Air Resources Board. 

On a conference call with analysts, Lumber Liquidators CEO John M. Presley said Tuesday that the retailer still has a chance with customers as long as the bad news continues to die down and its store associates have an opportunity to explain that its products are now safe. He admitted that much confusion remains.

“We have more explaining to do to the customers that come into stores,” Presley said. “So we certainly believe that it has an impact on us. It's not an impact that we have been able to precisely measure. And it's an impact that we see diminish over time as we stay out of the news.”