Lumber Liquidators 2011 Annual Report Download - page 23

Any disruption of our website or our call center could disrupt our business and lead to reduced net sales and reputational
damage.
Our website and our call center are integral parts of our integrated multi-channel strategy. Customers use our website
and our call center as information sources on the range of products available to them and to order our products, samples or
catalogs. Our website, in particular, is vulnerable to certain risks and uncertainties associated with the Internet, including
changes in required technology interfaces, website downtime and other technical failures, security breaches and consumer
privacy concerns. If we cannot successfully maintain our website and call center in good working order, it could reduce our
net sales and damage our reputation. Further, the costs associated with such maintenance may exceed our estimations.
We may incur costs resulting from security risks we face in connection with our electronic processing, transmission and
storage of confidential customer information.
We accept electronic payment cards for payment in our stores and through our call center. In addition, our online
operations depend upon the secure transmission of confidential information over public networks, including information
permitting cashless payments. As a result, we may become subject to claims for purportedly fraudulent transactions arising
out of the actual or alleged theft of credit or debit card information, and we may also be subject to lawsuits or other
proceedings relating to these types of incidents. Further, a compromise of our security systems that results in our customers’
personal information being obtained by unauthorized persons could adversely affect our reputation with our customers and
others, as well as our operations, results of operations and financial condition, and could result in litigation against us or the
imposition of penalties. A security breach could also require that we expend significant additional resources related to the
security of information systems and could result in a disruption of our operations, particularly our online sales operations.
Additionally, privacy and information security laws and regulations change, and compliance with them may result in
cost increases due to necessary systems changes and the development of new administrative processes. If we fail to comply
with these laws and regulations or experience a data security breach, our reputation could be damaged, possibly resulting in
lost future business, and we could be subjected to additional legal risk as a result of non-compliance.
Risks Related to Our Personnel
Our success depends substantially upon the continued retention of certain key personnel.
We believe that our success has depended and continues to depend to a significant extent on the efforts and abilities of
our senior management team. The loss, for any reason, of the services of any of these key individuals and any negative
market or industry perception arising from such loss, could damage our business and harm our reputation.
Our success depends upon our ability to attract, train and retain highly qualified managers and staff.
Our success depends in part on our ability to attract, hire, train and retain qualified managers and staff. Buying
hardwood flooring is an infrequent event, and typical consumers have very little knowledge of the range, characteristics and
suitability of the products available to them before starting the purchasing process. Therefore, consumers in the hardwood
flooring market expect to have sales associates serving them who are knowledgeable about the entire assortment of products
offered by the retailer and the process of choosing and installing hardwood flooring. As a result, competition for qualified
store managers and sales associates among flooring retailers is intense. We may not succeed in attracting and retaining the
personnel we require to conduct our current operations and support our potential future growth. In addition, as we expand
into new markets, we may find it more difficult to hire, motivate and retain qualified employees.
Risks Relating to Our Marketing and Advertising
Our success depends on the continued effectiveness of our advertising strategy.
We believe that our growth was achieved in part through our successful investment in local and national advertising. We
have typically located our stores in areas that have lower rents than traditional retail locations, but that are generally set some
distance from population centers and downtown urban areas. To support this real estate strategy, we have used extensive
advertising to encourage customers to drive to our stores. We may need to increase our advertising expense to support our
business strategy in the future. If our advertisements fail to draw customers in the future, or if the cost of advertising or other
marketing materials increases significantly, we could experience declines in our net sales and operating results.
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