Shares of Lumber Liquidators Inc. (LL) fell 5.1% Wednesday after the wood- flooring retailer said its ongoing store expansion helped generate higher quarterly profits.

Sales and profits were slightly ahead of Wall Street's forecasts, but investors may have been expecting a bigger earnings beat in light of smaller competitors' struggles, Cowen and Co. analyst Laura Champine said.

Shares have also more than doubled over the past two months, yet Champine doesn't expect same-store sales to turn positive until the fourth quarter given the weak housing market and economy.

"The 20-times multiple for a company that sells hardwood flooring is pretty heady," she said.

Lumber Liquidators profit rose to $5.1 million, or 19 cents a share, from $4.3 million, or 16 cents a share a year earlier. Sales rose 8.1% to $123.9 million, but sales at stores open at least a year declined 5.8%.

Lumber Liquidators executives said during a conference call that demand improved in March and April, with an annual sale in April generating increased orders and customer deposits. But shoppers are still cautious in their purchases, and with the average sales ticket down 8% in the latest quarter, Lumber Liquidators only reiterated its fiscal 2009 sales and earnings guidance.

Lumber Liquidators is one of the few retailers - much less home-related retailers - that hasn't pulled back on expansion plans in recent months. It expects to open up to 36 new stores this year and has said it will open 30 to 40 stores annually for the next several years. It has about 160 stores now and says it has benefited from smaller flooring stores going out of business, its growing footprint, and operational improvements that leverage expenses.

Lumber Liquidators holds about 7% of the fragmented $4.1 billion retail market for hardwood flooring, according to brokerage firm KeyBanc Capital Markets. Home Depot Inc. (HD) and Lowe's Cos. (LOW) have 17% and 16% market share, respectively.

Morgan Stanley said in a note to clients that Lumber Liquidators' 5.8% decline in same-store sales even as it increases market share likely means the big-box retailers' hardwood flooring departments are seeing double-digit percentage decreases in sales.

Home Depot and Lowe's have declined to comment on recent business trends ahead of their first-quarter reports in two weeks.

"If Lumber Liquidators can't post an upside surprise on the top line, probably Home Depot and Lowe's can't either, because Lumber Liquidators is a faster growing upstart," Cowen's Champine said. "Expectations are probably reasonable for Home Depot and Lowe's."

Shares recently traded 5.1% lower at $15.50.