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#We sent out close to about 27,000, I believe.
That's approximately translates to about 13,000 households.
It depends on size of home and size of the room where the flooring may be.
That's about where we are right now.
It's a pretty significant number to be processed and administrated, if you can imagine, getting customers sent to the lab, kits sent to the customer, the customers executing the kit in their home, following instructions and getting it back in and the lab processing and all that.
<UNK>, it is in the way that big sale fell, it's difficult.
Let me give you a little bit of color.
The number that we were at last year at this time, I think roughly about $57 million, would fall to about $50 million by the end of April.
So, there would be about a $7 million decline in that open order balance in the last few days of the month.
That kind of impact has already occurred this year.
As <UNK> said, the sale shifted, so we've already had a chance to invoice out a lot of that open order balance.
I would anticipate that our open order balance is going to wind up 3% to 5% higher than the prior year, once we get to the end of April.
As we said on our sales, that total sales were down about 2% in April.
On a compound growth rate, they are up about 1.3 months to date.
So, you're seeing some decent return in samples.
The open order balance is still slightly higher than the invoiced sales, but you are seeing the invoiced sales slowly recover.
I think they are all pointing in the right direction, but you're right.
There's a lot of math and a lot of numbers to watch out for.
That's one reason we are, one, trying to give you additional information to be more transparent, but there's always some factors to consider in those numbers.
<UNK>, I don't have that number.
This is <UNK>.
Over the last three years, we've been diversifying our sourcing across all categories.
In fact, even within the laminates, in the last three years we shifted ---+ if you look at the percentage of our laminates from China, we've reduced it, probably in the last three or four years, from about 80% down to less than 50%, actually, even before any of these issues came up.
Again, that was just mainly around diversification of supply and sharing availability of our value proposition and having the best looks and colors out there.
What we are doing now, it's all about the customer.
Where's demand.
What do they want.
What types of colors and styles do they want.
Country of origin, as well.
Obviously, there's a lot of concern right now about that.
For now, what we mentioned is, we are not adding to our purchases of those products.
We are going to continue to look and see, as time goes by, on what the customer wants.
We're going to make sure that we give the customer the products that they want.
What we did say is we are expanding the mix.
We are going to be shifting and expanding our existing mix that we're pulling from Europe, now, and the USA, within laminates.
Obviously, as you mentioned, value is such a key part of our value proposition.
As we came into the year and got back in stock of some of our constrained products, it was important for us to really live up to that part of our value proposition and ensure that we lead the market from a price perspective.
So, that's what a lot of what we're doing right now, obviously what we were doing before the event and we're continuing through with that.
I would tell you that, over time, we are contemplating how that impacts us and if and when we would want to start stepping that backup.
Right now, it's really about taking care of the customer, ensuring our brand is relevant out there.
That they see and we really live with our value proposition relative to value.
We're doing it across all categories.
Right now, we have an event going on which is basically what the Company was founded on, is getting a real solid or engineered product for the price of lesser products at the competition.
Even for laminate, you can get an engineered or solid at Lumber Liquidators.
That's what the Company was built on.
We are reinvesting in that.
It's good for customers.
It's good for our associates.
We want to keep them selling and keep them motivated and compensated effectively.
The good thing is that our business model and our direct-sourcing model allows us to do that in times like this.
I would say it's something we're going to stick to in the short term.
As we move forward and things get past us, we definitely don't want to be giving away ---+ we're always going to be looking and being conscious of where the competition is and making sure that we're maximizing the returns, as well.
There is room, obviously, there's going to be room to step that back up down the road, if and when we decide to.
Actually, I got praise the field organization.
As everybody knows, that was one of our gross margin drivers the last three or four years, where we're focusing on the ad hoc discounting and getting better operational execution in the field.
I got to tell you, our level of performance against our reduction of ad hoc discounting and that metric is the best as it's been since I've been here, even in the midst of all of what's going on right now.
We're absolutely ---+ the pricing is driven strategically, nationally, so that we're getting the full return on that perception across the entire marketplace that's to drive traffic into the stores and the stores are not ad hoc discounting.
We pretty much locked it down completely across most categories.
During the April sale we did loosen up a little bit.
On a lot of odd lot and deleted inventory we wanted to cleanse out, but that's about it.
We've got ---+ our disciplines in the field are better than they've ever been on ad hoc discounting.
It's all being driven nationally.
I'll tell you operationally, we did ---+ back to my previous answer, we did have a goal with the folks in the field to, again, with the Bellawood transition, it would allow the obsolete transition categories that we have out there.
We did open the spigot for the stores to sell through a lot of their ---+ we had obsolete identified by store and gave the stores a lot of flexibility to clear that out, and they did a very good job and, I think, relatively speaking, better than years past.
We raised the reserves by $1.7 million in total, the inventory reserves in the first quarter versus last year's $400,000, so that was $1.3 million.
That included an analysis of all flow moving.
Obviously, we had a lot of returns that came right after the broadcast in March, so we had to assess stranded inventory.
Those reserves, we feel adequate at the end of the first quarter.
Certainly, we've been running additional liquidation deals and whatnot during April.
That's all included in the 31% to 32% for April.
Reserves are that $1.3 million step up at the end of the first quarter.
Okay, let me try and answer all those.
Relative to laminates and your question on the dollar, that's one of the things we've been looking at the last couple years.
With the strengthening dollar versus the euro, it's helped us we ---+ prior to the current issue that hit us in March, we were transitioning some over there, and that was opening the doors for us with some really great factories in and across Europe.
This is why we were doing it.
It's also ---+ it continues to be a benefit.
As we look to even transition more of it.
That's a positive.
It helps us from a margin perspective.
Part of the reason we're doing that, by the way, was to really to try to, from a constrained inventory perspective that we were hit with last year, is to make sure we have duplication of supply and we have multiple suppliers and they're spread out geographically, so that we mitigate risk of any constraint issues in a particular country.
That's another reason why we had stepped up on the migration and the diversification of some of our top sellers, particularly laminates.
Like I said, the dollar is helping us to ensure that that impact is not too dramatic.
Now, what's hurting us right now, significantly, is obviously the mix.
I think as we do transition and broaden that assortment, particularly within some of the higher-margin 12-millimeter laminates and what have you and get more of them coming as well from Europe, that's going to help us overall with a mix, getting the back up to where it needs to be.
Dave, just real quick, the transition, I think, will take place throughout the summer, probably completed late August into September.
You had a question about the margin on laminates, and it's still higher than the Company average, even with the discounted ASP that we've been running in March and April.
It certainly got a potential to improve.
From here, obviously, yes.
Also, because of the mix and the ASP, the advance point.
If you did a SKU-by-SKU comparison, that may be difficult to actually get it exactly there.
To your point, with this trend to the dollar and then some of the availability over there in some really efficient factories that we've identified, that's going to be up to us to try to maximize the margin.
Nothing significant.
The West and the Pacific Northwest, they'll perform really well.
Texas is a little bit slower.
Obviously, that's had some well-publicized issues related to the oil rigs shut down and whatnot.
Nothing significant, obviously, we are loath to mention the weather word this year, but certainly, certain areas of the country had some difficulty.
Nothing we see as long term.
The Northeast, probably more than any.
Other than that, really not a significant difference across the rest of the country.
It's been interesting.
It's a very good question because instinctively, you would think that maybe the West Coast, California, would've been more impacted, but it was the opposite.
Thanks, Dave.
<UNK>, on the sequential, I don't have the numbers right in front of me, but April was the strongest month in the next three or four.
We were progressively weaker in May, in June and July of 2014 versus the same period in 2013.
I don't have them with me, but relatively speaking, April the strongest then each month was progressively weaker through July and then you started to see a turn in August and September.
<UNK>, I'll answer the question on the field.
Field morale is really good, very high.
I continue to get out there as much as I can, travel the stores.
We've done ---+ I think what's going on, as we are really, I think, reaping some benefits of our focus on the stores and the culture the last four years, our annual LLU events.
Again, our flattened organization and our culture putting the stores first.
They are in a great place, relatively speaking, considering the issues we've all been faced with.
Obviously, it's impacted them.
I will tell you, I'm so proud of the entire organization in terms of the corporate staff, our call center, our customer care department in terms of the amount of phone calls they've had to handle and deal with in terms of upset customers.
Really, it's a testament to the culture of the Company in terms of doing the right thing and taking care of the customer.
To your point about the stores, the metric I had mentioned earlier, it is really is a good barometer of where the field is.
Because given our long-purchase cycle, the fact that the customers have responded and the stores have also done an extremely good job of handling customers in the store, eyeball to eyeball, with their questions and their concerns that were raised.
We did a very good job of training and having conference calls.
We've had several all-store conference calls, where me and the senior team have been on with the stores talking with them, transparently, about what's going on and arming them with the right information so that they can help take care of the customers, and then they actually ---+ they have.
Day in and day out, out there, the field has, with support from the corporate office, has done an incredible job.
I'm so proud of them.
They are in a great place, and they continue to take care of our customers and keep selling.
That's what they're doing.
This is <UNK>.
What I can say is that for the last several years, we've been working with CARB, cooperating with them.
I've actually been out there to several of their workshops as they've been working on amendments to the regulation.
We've been present with them, in communication with them, even before any of these issues popped up.
We continue to do that.
To your question about what they're doing, what we believe and as much as we can tell from what they've told us or what they've communicated, they have been looking at deconstructive testing.
They have been looking at our products and other folk's products out there across different industries, not just within flooring.
They are doing work on that, and I don't have much specifics about that.
All I can tell you is what we disclose, is that we're working with them; they are conducting tests.
We had no further action from them since they've been doing this, at all.
Again, the dialogue and the transparency and the working and cooperating continues.
Thank you, <UNK>.
Appreciate it.
You are, <UNK>.
The one thing I would point out, is the $2.3 million included a $1.8 million for the kits and a $500,000 reserve and then there was another $1.6 million related to the transportation costs as we moved product from the old East Coast DCs.
We had four buildings there and finished the consolidation into one facility by March 31.
There was another $1.6 million and roughly 60 basis points, 62 basis points in there, as well.
For the quarter, right.
As we look forward into April, the main difference between 2014 and 2015 is going to be in the retail price and in the sales mix to generate traffic.
A lot of these one-off items that went through in the quarter, some of them in March, the quarterly margin was stronger than it would have been because prior to the March 1 broadcast, the margin was much stronger.
Roughly about 700 basis points of impact as you look into April.
Dave, this is <UNK>.
What I would tell you is given the amount of tests and how unprecedented a study like this is, it's too early in the process for us for to provide information, but we are anticipating to be able to do that pretty soon.
In general, what I can tell you is, based on the input from our third-party experts, from a number of sources, the test is administrating based on expectations.
The return rates, the results are all basically in line in terms of what was expected and modeled going into it.
Really, it's about all the demand metrics.
Overall, we're encouraged, given where we were, given the impact to our business, given that all we do is flooring.
This is not 300 SKUs amongst 30,000 in a big box store.
Given the relative impact on our business and how non-diversified we are across our product categories, I'm very encouraged with the Company's reaction to the issues, the response to the customers, across the corporate office, customer care and down into the stores and how we are responding.
Each day since March 1, I've been pleased with how the field is responding, the customers are coming back, the net returns and adjustments, we feel really good.
So, I anticipate to continue to feel that way as we go forward.
Back to <UNK>'s questions about the morale, and morale is strong in the field.
They're supported extremely well by the entire organization here, and they are doing their job.
As we continue to get stabilized and be confident in that 100-day cycle, the demand metrics underneath, the open order build, I think it's really a matter of time as we get back to where levels of performance and expectations that we were performing at prior.
I can't tell you when, but I think that the effort and that's a goal and that's our 100% focus is on our customers, on our stores, and getting the business back to where it needs to be.
<UNK>, as we see customer demand trends develop and information that we think is going to be meaningful, definitely, we will give more frequent information.
It's difficult for us, obviously, to look so far ahead.
Until we can, until we get better visibility, we'll certainly give more frequent updates.
Thank you, everyone, for joining us on today's call.
As we look forward, our team remains energized and dedicated to delivering strong results in growth that we believe is achievable, long term, for Lumber Liquidators.
I want to thank our Lumber Liquidators team for their hard work over the last few quarters.
What you do every day out in the field matters.
Every time you help a customer, you reflect our core values and you make us better and stronger.
I also want to thank our customers for their support.
We have been working with many of you for years and we plan to do so for years to come.
We look forward to speaking with everyone again on the next earnings call to report on our continued progress and executing our strategic initiatives to achieve our long-term objectives.
Thank you.
