Lumber Liquidators 2007 Annual Report Download - page 4

Enhanced Product Offering. We diversified and expanded our product selection, building on our
assortment of more than 25 species. We introduced new premium products within key lines such as
handscraped solid and engineered hardwood by our Virginia Mill Works Co. brand, stained and strand
bamboos by our Morningstar brand, and laminates with heavier-wear layer and foam backing by our Dream
Home brand. Importantly, we enhanced our highly recognizable, premium Bellawood product line. Overall,
we strengthened our commitment to a greater in-stock position, including key moldings and accessories.
Improved Customer Service. We also focused on enhancing the customer experience and improving our
service offering. We added regional store management, dedicated resources to training associates and
introduced new service initiatives, including better alignment between our stores and customer website. We
also improved the ability of our customers to educate themselves and increased the accessibility of our
associates through our four complimentary sales channels. These channels include our stores, call center,
website and catalog—all of which work together to facilitate the sales process.
The Look Forward—A Clear Path and Exciting Growth Opportunities
We are pleased with our solid results for the year and are truly enthusiastic about our growth prospects. We
are in an advantageous position as a relatively small company with a large market opportunity. Our model is
adaptable, which enables us to reach our target customer regardless of housing market conditions. Further, we
focus on selling our products to existing homeowners who are firmly established and are somewhat insulated
from the ebbs and flows of the housing cycle. We are pleased that our model allows us to grow quickly so that we
may maximize opportunities when the housing market eventually shifts.
The hardwood flooring market is highly fragmented, with more than 50% of the market belonging to
independent retailers. This represents a significant opportunity for us and we are confident that there is substantial
room to gain additional market share from our competitors. Plus, as hardwood flooring increases in popularity, we
expect to continue taking market share from other types of flooring retailers.
We have four key growth objectives for 2008. We intend to grow net sales, expand margins, leverage our
brand marketing across channels, and continue to expand the footprint of our low risk, high return store base. Our
net sales growth will be driven in part through our plan to open 30 to 40 new stores this year.
As we open new stores, they ramp-up quickly through the support of our national advertising as well as our
multi-channel presence. Our brand marketing is multi-faceted and reaches our consumers at many points outside of
our stores. Combine our strong brand with our low construction costs and high return on invested capital rates, and
we believe that we can continue to quickly and profitably build Lumber Liquidators’ store base for years to come.
As we look forward, we are excited by our momentum and optimistic about our future. We are well
positioned within the industry and believe we have the right business model, professional talent, and infrastructure
in place to maximize our long-term potential. While we are mindful of the broader economy, we expect that the
efficiencies we are creating will enable us to drive continued strong growth. Moreover, we will remain focused on
what we do best: offering the unique value proposition of competitive pricing and superior selection of quality
products available to meet the delivery needs of our customers.
We are grateful for our customers, partners and employees, and we want to personally thank all of you for
your continued support. As Lumber Liquidators embarks on its first full year as a public company, there is much
to look forward to and we are very happy to share it with you.
Sincerely,
Tom Sullivan
Founder and Chairman of the Board
Jeffrey Griffiths
President and Chief Executive Officer