When Lennar CEO Stuart Miller predicted more losses to come after the builder reported a $244.2 million loss in the second quarter, it is doubtful that he wanted to be this right. On Tuesday, the Miami-based home builder reported a $513.9 million third-quarter net loss. Miller cited an industry "defined by the overhang of inventory" as the top reason for the company's poor quarter.
"We need to pull back, retrench, and wait for another day," Miller said during a conference call.
Lennar, No. 2 in the 2006 BUILDER 100, reported revenues of $2.3 billion, down 44 percent from 2006's third quarter. In addition, deliveries of homes dropped 41 percent, and new home sales are down 48 percent with a cancellation rate of 32 percent.
Miller says the company is now focused on reducing inventory, starts, and land acquisitions, but the builder has "stopped short of fire-selling" its homes. And although deliveries and home sales are down, Miller insists that there are customers out there.
"They just aren't motivated," he explained. "Many deals that are struck now are prone to cancellation."
Another focus, explains Miller, is the need to scale back while maintaining the company's current geographic footprint. He stressed that Lennar would not pull out of any markets but promised to "scale back" and "scale down" their operations nationwide. This strongly suggests that Lennar is gearing up for more layoffs. To date, 35 percent of the builder's workforce has already been cut.
Miller added that the company's future includes a "slow and methodical rebuilding process."
"It sometimes feels like the market will never recover," Miller said. "It will, and we are preparing for that day."
Miller declined to provide any further outlook for the remainder of the fiscal year.
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