Lumber Liquidators 2007 Annual Report Download - page 3

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April 11, 2008
Dear Shareholders,
Since its founding more than 10 years ago, Lumber Liquidators has evolved into a leading specialty retailer
of hardwood flooring with a strong business model poised for significant growth. Our brands are recognized
nationally and our unique value proposition is appealing to both our customers and our investors. We have
established a solid foundation on which to build and we have an exciting future ahead of us.
In joining the public markets, we marked a pivotal event in our Company’s history and set the stage to
maximize our long-term growth opportunities. On November 9, 2007, we offered 3.8 million shares at $11 per
share, generating approximately $36.2 million of net proceeds. We are delighted with this outcome—particularly
in light of the difficult economic environment—and look forward to returning long-term value to our shareholders.
In 2007, we also delivered excellent financial results despite a challenging economy. At the same time, we
made significant investments in our business that further strengthened our operations and enabled us to enhance
our products and services. We expect that all of this will lead to profitable growth going forward.
Delivered Strong Financial Results in a Challenging Market
We generated robust sales and healthy earnings in 2007 within a retail environment that proved to be
difficult for many of our competitors. Throughout the year, our business model yielded solid results as we further
established market leadership in our growing niche and completed our 25 planned new store openings.
Our overall financial performance in 2007 was strong, as we drove net sales growth of 22.1% to $405.3
million, reported a comparable store sales increase of 8.6%, and achieved net income of $11.3 million, or $0.48
per fully diluted share. We finished the year with a strong balance sheet that reflected a solid cash position of
$33.2 million, appropriate inventory levels, and no long-term debt.
Our results provide us with significant financial flexibility, which is key to implementing our aggressive
growth plans and building on our positive momentum.
Created a Strong Foundation for the Future
During 2007, we invested in our future by strengthening our infrastructure, introducing new discipline, and
expanding our management team. These investments, which are now substantially complete, did result in a short-
term increase in our SG&A as a percentage of sales. However, they have quickly helped to generate efficiencies
and will drive margin expansion as they are further leveraged. Importantly, improving our infrastructure and
creating a stronger retail platform also allowed us to enhance our product offering and further develop our
superior customer service during 2007.
Strengthened Infrastructure. Our improvements included enhancements to our operating platform and
upgrades to our inventory planning and merchandise management systems. We also added staff across all
levels of the organization, bringing in new retail experts as well as professionals with finance and public
company experience. These improvements and additions—along with a renewed focus on traditional
retailing disciplines—have enabled us to operate more consistently and execute at a higher level.