Lumber Liquidators 2008 Annual Report Download - page 9

PART I
Item 1. Business.
Overview
Lumber Liquidators is the largest specialty retailer of hardwood flooring in the United States, based on
industry sources and our experience. We believe we have achieved a reputation for offering great value, superior
service and a broad selection of high-quality hardwood flooring products. We offer an extensive selection of
premium hardwood flooring products under multiple proprietary brands at everyday low prices designed to
appeal to a diverse customer base. We generally purchase our products directly from mills or associated brokers.
We believe that our vertically integrated business model enables us to offer a broad assortment of high-quality
products to our customers at a lower cost than our competitors.
Our company was founded in 1994 by Tom Sullivan, the current chairman of our board of directors, and in
1996, he opened the first Lumber Liquidators store near Boston, Massachusetts. Tom believed that traditional
home improvement and flooring retailers underserved the homeowner in terms of selection, quality, price and
product availability, presenting an opportunity to sell hardwood flooring at “liquidator” prices. Tom established
relationships directly with vendors and mills to provide customers with broad, high-quality assortments at
everyday low prices. He also identified the opportunity to better serve customers by employing knowledgeable
sales staff to educate the customer about the product and provide advice on self-installation or working with
contractors. Tom opened the second Lumber Liquidators store in Hartford, Connecticut, starting our company’s
national expansion, and as of December 31, 2008, we sold our products through 150 Lumber Liquidators stores
in 44 states, a call center, our website and catalogs, operating as a single business segment.
We believe that our brands, value proposition and integrated multi-channel approach are important
competitive advantages in a hardwood flooring market that is highly fragmented. We have invested significant
resources developing our national brands, including our name and proprietary products, which include our
flagship Bellawood brand, and expect to continue to invest resources in our advertising and marketing at a
percentage of net sales greater than our competitors. We believe Lumber Liquidators is now recognized across
the United States as a destination for high-quality hardwood flooring at everyday low prices, while our
Bellawood brand is known as a premium flooring brand within the industry.
Our corporate headquarters is in Toano, Virginia, where we also operate our distribution and finishing
facility and our call center. In August 2007, we reincorporated from Massachusetts to Delaware, and in
November 2007, we completed our initial public offering. Our stock now trades on the New York Stock
Exchange under the symbol “LL.”
Our Value Proposition
Our value proposition to the customer is a key driver of our business. Important components include:
•Price.A fundamental part of our founding philosophy is to provide quality hardwood flooring brands
at everyday low prices. We are able to maintain these prices across our product range because we
purchase flooring directly from mills and brokers. In addition, we operate a low-cost store model with a
“no frills” showroom, limited in-store inventory and locations in industrial or commercial areas that
carry lower rent expense than many retail stores.
•Selection.We have developed a broad product assortment of domestic and exotic hardwoods sold
under proprietary brands that help us to differentiate our products from those of our competitors. We
offer products across a range of price points and quality levels that allow us both to target discrete
market segments and to appeal to diverse groups of customers.
•Quality.We believe that we have achieved a reputation for quality, and that our proprietary brands are
recognized for excellence by our customers. We work directly with our supplier mills and brokers to
source and produce flooring that will meet our high quality standards and we also currently finish
3