Lumber Liquidators 2011 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 with 256 stores operating
in 46 states as of December 31, 2011. In addition, we opened our first stores in Canada during 2011, and as of December 31,
2011, seven stores served the greater Toronto area.
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, operating as a single
business segment, enables us to offer a broad assortment of high-quality products to our customers at a lower cost than our
competitors.
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.
We were founded in 1994. In November 2007, we completed our initial public offering and now the stock of Lumber
Liquidators Holdings, Inc. trades on the New York Stock Exchange under the symbol “LL.” We are a Delaware corporation
with a corporate headquarters in Toano, Virginia, where we also operate a distribution and finishing facility and our call
center. Unless otherwise stated, references to “we,” “our” and “Lumber Liquidators” generally refers to Lumber Liquidators
Holdings, Inc. and its consolidated subsidiaries.
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 business model is to provide quality hardwood flooring at everyday low prices.
We are able to maintain these prices across our product range because we generally purchase flooring directly from
mills. In addition, we operate a low-cost store model with locations in 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 to source and produce flooring that will
meet our high quality standards. We also currently finish at our Toano facility approximately 79% of our premium
Bellawood products, which now carry a 100-year, transferable warranty. 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. We believe that these direct supplier relationships are relatively unique in our industry; and, as 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.
•People. We position ourselves as hardwood flooring experts and believe our high level of customer service reflects
this positioning. Key elements of our service include product education on species and construction so that our
customers can select flooring that is best aligned with the use of the room, site conditions at the house and local
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