Lumber Liquidators 2008 Annual Report Download - page 19

The hardwood flooring industry depends on the economy, home remodeling activity, the homebuilding
industry and other important factors.
The hardwood flooring industry is highly dependent on the remodeling of existing homes and new home
construction. In turn, remodeling and new home construction depend on a number of factors which are beyond
our control, including interest rates, tax policy, employment levels, consumer confidence, credit availability, real
estate prices, demographic trends, weather conditions, natural disasters and general economic conditions. If:
• the national economy or any regional or local economy where we operate continues to weaken;
• interest rates rise;
• credit becomes less available;
• regions where we operate experience unfavorable demographic trends;
• fuel costs or utility expenses increase; or
• home-price depreciation continues;
that could limit discretionary consumer spending, reduce spending on remodeling of existing homes and cause
purchases of new homes to decline further. Any one or a combination of these factors could result in decreased
demand for hard surface flooring, including in particular premium hardwood flooring, in remodeled and new
homes, which would harm our business and operating results.
Increasing our sales and profitability depends substantially on our ability to open new stores and is subject to
many unpredictable factors.
As of December 31, 2008, we had 150 stores throughout the United States, 75 of which we opened after
January 1, 2006. We plan to open between 30 and 40 new stores during each of the next several years. This
growth strategy and the investment associated with the development of each new store may cause our operating
results to fluctuate and be unpredictable or decrease our profits. Our future results will depend on various factors,
including the successful selection of new markets and store locations, our ability to negotiate leases on
acceptable terms, management of pre-opening expenses, the quality of our operations, consumer recognition of
the quality of our products, our ability to meet customer demand, the continued popularity of hardwood flooring
and general economic conditions. In addition, as we open more stores, our rate of expansion relative to the size of
our store base will decline. We may not be able to identify suitable store locations in markets into which we seek
to expand and may not be able to open as many stores as planned. Consumers in a new market may be less
familiar with our brands, and we may need to increase brand awareness in that market through additional
investments in advertising. Stores opened in new markets may have higher construction, occupancy or operating
costs, or may have lower average store net sales, than stores opened in the past. In addition, we may incur higher
maintenance costs associated with our strategy of seeking out low-cost store locations than in the past. Newly
opened stores may not succeed or may reach profitability more slowly than we expect, and the ramp-up to
profitability may become longer in the future as we enter more mid-sized and smaller markets and add stores to
larger markets where we already have a presence. Future markets and stores may not be successful and, even if
we are successful, our average store net sales and our comparable store net sales may not increase at historical
rates. Finally, our progress in opening new stores from quarter to quarter may occur at an uneven rate, which may
result in quarterly sales and profit growth falling short of market expectations in some periods.
Our sales and profit growth could be adversely affected if comparable store sales are less than we expect.
While future sales growth will depend substantially on our plans for new store openings, the level of
comparable store sales (which represent the change in period-over-period sales for stores beginning in their 13th
full month of operations) will also affect our sales growth and business results. Comparable store sales increases
decelerated during 2008, and we do not expect comparable store sales growth to continue at historical levels due
to the impact of weaker consumer spending as a result of the economic downturn and difficult prior-year
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