Lumber Liquidators 2012 Annual Report Download - page 20

Product liability claims could adversely affect our net sales, profitability and reputation.
We face an inherent risk of exposure to product liability claims in the event that the use of our products is alleged to
have resulted in personal injury or property damage. In the event that any of our products proves to be defective, we may be
required to recall or redesign such products. Further, in such instances, we may be subject to legal action. We maintain
insurance against some forms of product liability claims, but such coverage may not be adequate for liabilities actually
incurred. A successful claim brought against us in excess of available insurance coverage, or any claim or product recall that
results in significant adverse publicity against us, may have a material adverse effect on our net sales and operating results.
We may not be able to successfully anticipate consumer trends and our failure to do so may adversely impact our net sales
and profitability.
As part of our business proposition, it is important for us to anticipate and respond to changing preferences and
consumer demands in a timely manner. If we fail to identify and respond to emerging trends, consumer acceptance of the
merchandise in our stores and our image with our customers may be harmed, which could reduce customer traffic in our
stores and adversely affect our net sales. Moreover, consumer demand within our mix of products may shift and such change
may negatively impact our net sales and operating results.
Risks Related to Our Operations
Increasing our net sales and profitability depends substantially on our ability to open new stores and is subject to many
unpredictable factors.
As of December 31, 2012, we had 288 stores throughout the United States and Canada, 172 of which we opened after
January 1, 2008. We plan to open a significant number of new stores during each of the next several years. This growth
strategy and the investment associated with the development of each new store may cause our operating results to fluctuate
and be unpredictable or decrease our profits. Our future results will depend on various factors, including the following:
• the successful selection of new markets and store locations;
• the implementation of and results generated by our new showroom format;
• our ability to negotiate leases on acceptable terms;
• management of store opening costs;
• the quality of our operations;
• consumer recognition of the quality of our products;
• our ability to meet customer demand;
• the continued popularity of hardwood flooring; and
• general economic conditions.
In addition, the following may impact the net sales and performance of our new stores compared to prior years:
• as we open more stores, our rate of expansion relative to the size of our store base will decline;
• we may not be able to identify suitable store locations in markets into which we seek to expand and may not be
able to open as many stores as planned;
• consumers in new markets may be less familiar with our brands, and we may need to increase brand awareness in
those markets through additional investments in advertising;
• new stores may have higher construction, occupancy or operating costs, or may have lower average store net sales,
than stores opened in the past;
• we may incur higher maintenance costs than in the past;
• newly opened stores may not succeed or may reach profitability more slowly than we expect, and the ramp-up to
profitability may become longer in the future as we enter more mid-sized and smaller markets and add stores to
larger markets where we already have a presence; and
• future markets and stores may not be successful and, even if we are successful, our average store net sales and our
comparable store net sales may not increase at historical rates.
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