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Lumber Liquidators Holdings Management Discusses Q2 2012 Results - Earnings Call Transcript

Though we had planned our 2012 advertising spend as a percentage of net sales to approximate 2011, we are pleased to have achieved leverage through a strong top line in the second quarter. We are committed to reinvesting our national advertising leverage and programs to drive traffic. We are also focused on increasing the effectiveness of our total advertising spend.

Combined with strong store traffic in the second quarter, our average sale contributed to our top line growth. Our average sale in the second quarter improved more than 6% versus a year ago. We believe the increase is due largely to better servicing of our customers by our world-class sales force, reflecting strives made in our best people initiative. We have seen higher average retail prices per units sold, which indicates to us that consumers continue to prefer premium products across a wide range of categories. Further, we have continued to see solid sales of moldings and accessories, a category which includes an expanded assortment of flooring tools.

To update you on our store growth. We are still on track to open a total of 20 to 25 stores in 2012. We opened 10 stores in the second quarter, which brings us to a total of 14 openings in the first half of 2012. We are pleased to have seen increases in both total market penetration as well as second quarter comparable store net sales in our cannibalized markets.

In terms of our overall real estate strategy, we continue to utilize our enhanced site selection process and will appropriately balance our mix of new stores, relocations, remodels and assortment expansions as lease renewables come up. Importantly, we are also developing a store layout of the future, and we can roll out to both existing and new stores. We are in the very early stages of this process but we are excited and pleased with our initial progress.

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