Lumber Liquidators 2009 Annual Report Download - page 13

ease with which it can be installed. In addition, we use targeted television advertising on cable networks such as Discovery
Channel, HGTV, TLC, DIY Network and A&E Network. We engage in sports marketing by participating in opportunities
with, among others, Major League Baseball and National Basketball Association teams and sponsoring the Lumber
Liquidators Professional Bowlers Association Tour. On the Internet, our advertising efforts include the use of banner
advertising, sponsoring links on well-known search engines, having storefronts with large e-tailers and having a large
network of online affiliate partners.
We believe our national advertising campaigns have been successful, and we expect to see greater returns on our
investment in national advertising as more stores open near people who have already been introduced to our brands.
Our Customers
We seek to appeal to customers who desire a high-quality product at an attractive value, and are willing to travel to less
convenient locations to get it. We sell our products principally to existing homeowners, who we believe represent over 90%
of our consumer count. Historically, these homeowners are in their mid-30’s or older, are well-educated and have been living
in their homes for at least several years. According to industry sources, over half of hardwood flooring purchases are made
by households with incomes levels above the average domestic household. We have found that homeowners prefer various
characteristics of wood floors, including appearance and durability, ease of installation, renewability of resources and
specific aspects of engineered, resilient and laminate flooring. Most of our other sales are to contractors, who are primarily
small businesses that are either building a small number of new homes or have been hired by an owner to put in a new floor.
Our Products
We offer a complete assortment of wood flooring that includes prefinished premium domestic and exotic hardwoods,
engineered hardwoods, unfinished hardwoods, bamboo, cork and laminates, as well as resilient flooring. Our product
offering is substantially comprised of our proprietary brands, led by our flagship Bellawood brand. Our hardwood flooring
products are generally available in various widths and lengths. They are generally differentiated in terms of quality and price
based on the species, grade of the hardwood and quality of finishing, in addition to the length of the warranty. Prefinished
floors are finished in factories under controlled conditions and are ready to be enjoyed immediately after they are installed.
We also offer a broad assortment of flooring enhancements and installation accessories, including moldings, noise-reducing
underlay and adhesives, that complement our assortment of floor offerings. In total, we offer nearly 350 different flooring
product stock-keeping units.
2009 2008 2007
Percentage of Net Sales:
Hardwood (Solid and Engineered) ..................................... 57% 64% 69%
Laminates ........................................................ 18% 13% 10%
Moldings and Accessories ............................................ 13% 11% 10%
Bamboo and Cork .................................................. 11% 11% 9%
Other ............................................................ 1% 1% 2%
Total ............................................................. 100% 100% 100%
Solid Hardwood. Our proprietary solid hardwood products are milled from one thick piece of wood, which can be
sanded and refinished numerous times. We offer flooring products made from more than 25 wood species, including both
domestic woods, such as ash, beech, birch, hickory, northern hard maple, northern red oak, pine and American walnut, and
exotic woods, such as bloodwood, cherry, cypress, ebony, koa, mesquite, mahogany, rosewood and teak. We sell these
products either prefinished or unfinished. Our prefinished hardwoods typically carry a wear warranty from 25 to 50 years.
Engineered Hardwood. Our proprietary engineered hardwood products are produced by bonding a layer of hardwood to
a plywood or high-density fiber board backing. Like our solid hardwood floors, our engineered hardwood floors are offered
in domestic and exotic wood species, and in either glue down or floating application. All of our engineered hardwood
products are prefinished. Engineered flooring is designed primarily to be installed in areas where traditional hardwood is not
conducive, such as slab construction, basements and areas where moisture may be a factor. Our engineered assortment
typically carries a wear warranty of 30 to 50 years.
Laminates. Our proprietary laminate flooring is typically constructed with a high-density fiber board core, inserted
between a melamine laminate backing and high-quality photographic paper displaying an image of wood and a ceramic
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