Lumber Liquidators 2009 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 attractive 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, 2009, we sold our products through 186 Lumber Liquidators
stores in 45 states, our 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. We reorganized effective December 31, 2009, creating a new holding company structure, and as a
result, a new parent company named Lumber Liquidators Holdings, Inc. was formed. Unless otherwise stated, references to
“we,” “our” and “Lumber Liquidators” generally refers to Lumber Liquidators Holdings, Inc. and its direct and indirect
subsidiaries on a consolidated basis. Our stock 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 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 locations in industrial or commercial areas
that carry lower rent expense than many retail stores.
•Selection.We have developed a broad product assortment of solid and engineered hardwoods, laminates, resilient,
bamboo and cork flooring products, moldings and flooring accessories 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 approximately 75% of our premium
Bellawood products at our Toano facility. We maintain an in-house inspection and quality control function and
enforce strict certification requirements for Bellawood supplier mills.
•Availability.Since our founding, we have made it a priority to build long-term relationships with our key supplier
mills and brokers. We believe that these direct supplier relationships are relatively unique in our industry, and as
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