Lumber Liquidators 2007 Annual Report Download - page 25

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could impede our ability to build on the efforts they have undertaken with respect to our business. Specifically,
the loss of Tom Sullivan, our founder (or “Founder”) and the chairman of our board of directors, could harm us.
Under his guidance, we experienced rapid growth and established ourselves as a leading company in the industry.
Tom continues to have an active role in determining our strategic direction and assisting with our day-to-day
operations, and we believe that if we no longer had access to his product knowledge and relationships with our
suppliers, it would eliminate an important competitive advantage. In addition, the loss of Jeff Griffiths, our
president and chief executive officer, or Dan Terrell, our chief financial officer, could harm us, as we rely on
their significant experience with reporting companies and the retail industry.
Our success depends upon our ability to attract, train and retain highly qualified managers and staff.
Our success depends in part on our ability to attract, hire, train and retain qualified managers and staff.
Buying hardwood flooring is an infrequent event, and typical consumers have very little knowledge of the range,
characteristics and suitability of the products available to them before starting the purchasing process. Therefore,
consumers in the hardwood flooring market expect to have sales associates serving them who are knowledgeable
about the entire assortment of products offered by the retailer and the process of choosing and installing
hardwood flooring. As a result, competition for qualified store managers and sales associates among flooring
retailers is intense. We may not succeed in attracting and retaining the personnel we require to conduct our
current operations and support our potential future growth. In addition, as we expand into new markets, we may
find it more difficult to hire, motivate and retain qualified employees.
Increased competition could cause price declines, decrease demand for our products and decrease our market
share.
We operate in the hardwood flooring industry, which is highly fragmented and competitive. We face
significant competition from multinational home improvement chains, national and regional flooring specialty
chains, Internet-based companies and privately-owned single-site enterprises. We compete on the basis of price,
customer service, store location and range, quality and availability of hardwood flooring we offer our customers.
Our competitive position is also influenced by the availability, quality and cost of merchandise, labor costs,
finishing, distribution and sales efficiencies and our productivity compared to that of our competitors. As we
expand into new and unfamiliar markets, we may experience different competitive conditions than in the past.
Some of our competitors are larger organizations, have existed longer, are more diversified in the products
they offer and have a more established market presence with substantially greater financial, marketing, personnel
and other resources than we have. In addition, our competitors may forecast market developments more
accurately than we do, develop products that are superior to ours or produce similar products at a lower cost, or
adapt more quickly to new technologies or evolving customer requirements than we do. Intense competitive
pressures from one or more of our competitors could cause price declines, decrease demand for our products and
decrease our market share.
Hardwood flooring may become less popular as compared to other types of floor coverings in the future. For
example, our products are made using various hardwood species, including rare exotic hardwood species
harvested from rainforests, and concern over the environmental impact of tree harvesting could shift consumer
preference towards synthetic or inorganic flooring. In addition, hardwood flooring competes against carpet, vinyl
sheet, vinyl tile, ceramic tile, natural stone and other types of floor coverings. If consumer preferences shift
towards types of floor coverings other than hardwood flooring, we may experience decreased demand for our
products.
All of these competitive factors may harm us and reduce our sales and profits.
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