Lumber Liquidators 2009 Annual Report Download - page 10

we have grown, we believe our relationships with our suppliers have strengthened. We believe our commitment to
merchandise inventory throughout our distribution network allows us to meet the delivery needs of our customers
better than our competitors.
Our Growth Strategy
We intend to continue to increase net sales and profitability by strengthening our position as a leading provider of
hardwood flooring. Specific elements of our strategy for continued growth include the following:
•Improve Market Breadth and Profitability. The hardwood flooring market is highly fragmented, and we believe
there is a significant opportunity to expand our store base in new and existing markets. We expect this expansion
will drive market productivity through new store growth, operational efficiencies and comparable store net sales
performance. We continue to build on what we believe is our strong track record of consistent store-level execution
with a low capital investment and attractive returns. We plan to open between 36 and 40 new stores during each of
the next several years, in an approximately equal mix of new and existing markets.
•Commitment to Merchandise Inventories. We believe our commitment to merchandise inventories enhances our
value proposition, further distances us from the smaller, independent flooring retailers and thereby increases our
market share. We expect net sales growth will continue to benefit from a strengthened commitment to in-stock
positions of our top selling products. We believe our profitability will also increase from a continued investment in
merchandise planning, forecasting and allocation on a regional and store-level basis, coupled with further
development of logistic initiatives and enhanced integrated information technology.
•Leverage Brand Marketing Across Multiple Channels. We use our advertising and marketing activities and our
multiple sales channels to help educate potential customers about hardwood flooring. As customers learn more
about hardwood flooring and how best to shop for it, they also learn more about our products and value
proposition, which we believe drives customer store visits and purchases of our products. We believe that as we
continue to leverage our multi-channel strategy, we will drive repeat customer traffic. We have also made a
significant advertising and marketing investment to link our brands to quality and value, as well as to establish
ourselves as the hardwood flooring experts. As we continue to grow and open more stores in both new and existing
markets, we believe that our marketing and branding activities will become more efficient and targeted. We also
believe that our customer acquisition costs will decline on both a per-customer and per-store basis.
•Expand Operating Margins. We attribute our success to our focus on and our ability to deliver on our value
proposition to the customer, which results from leveraging our strength as a vertically-integrated, low-cost
operator. As we continue to increase our net sales, we plan to gradually expand our operating margin through a
combination of merchandising, product allocation and logistics initiatives and economies of scale while leveraging
our brand marketing and infrastructure investments.
Our Brands
We believe both Lumber Liquidators and Bellawood are well-known national brands. We have positioned Lumber
Liquidators to represent an attractive value proposition to the customer, and believe we offer superior service and hardwood
flooring expertise. We are committed to supporting our brands and products through diverse national marketing campaigns
that reach a wide variety of potential customers.
We offer a large selection of hardwood flooring year-round at everyday low prices primarily under our proprietary
brands, ranging in quality from our premium Bellawood brand to our more economical brands.
Our Integrated Multi-Channel Sales Model
We have an integrated multi-channel sales model that enables our national store network, call center, website and
catalogs to work together in a coordinated manner. We believe that due to the average size of the sale and the general
infrequency of a hardwood flooring purchase, many of our customers conduct extensive research using multiple channels
before making a purchase decision. Our sales strategy emphasizes customer service by providing superior convenience and
education tools for our customers to learn about our products and the installation process. We hire store associates who often
have relevant industry experience and our call center is staffed by more than 50 flooring experts. Customers can order
samples or catalogs and access product research and information through any of our sales channels.
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