Lumber Depot Bottom-Line continues to decline

 

• Lumber Depot reported a net profit of $78.20Mn for its six months ended October 31, 2022, which represents a decline of 27.1% relative to the previous period of 2021.
• Despite seeing revenue growth of 2.2%, Lumber’s customer base reacted negatively to economic conditions, including higher interest rates and increased prices for certain key construction inputs and hardware items. Additionally, its cost of sales increased by 6.9% which put some pressure on its gross margin.
• Going forward, the outlook for Lumber Depot is uncertain as the factors that adversely impacted their financial performance in the past six months are expected to remain in the near term. Consequently, the company is likely to underperform in its subsequent quarters.
• LUMBER’s stock price has decreased by 23.3% since the start of the calendar year. The stock closed Thursday’s trading session at $2.32 and currently trades at a P/E of 10.5x which is below the Junior Market Distribution Sector Average of 16.9x.

(Sources: JSE and NCBCM Research)