Lumber Liquidators 2013 Annual Report Download - page 14

Bamboo, Cork and Vinyl Plank. Our proprietary bamboo products, harvested from the fast growing
bamboo plant, are offered as a prefinished, natural or stained, solid or engineered floor. Our proprietary cork
flooring is produced by harvesting the outer bark of the cork oak tree, and it is durable, acoustical and acts as
an insulator. Produced from recycled materials, our vinyl plank flooring comes in realistic wood and tile
looks, is water-resistant, highly durable and installs with ‘‘peel-and-stick’’ or click-together ease. Our bamboo,
cork and vinyl plank flooring products carry wear warranties ranging from 25 to 50 years, and our Bellawood
bamboo products carry a 100-year, transferable warranty.
Moldings and Accessories. We offer a wide variety of wood flooring moldings and accessories.
Moldings are a required finishing detail to every floor and we sell a complete selection that matches virtually
all of our floors or can complement them. We also sell stair treads and risers in both finished and unfinished
versions. Accessories include sealers, adhesives and underlayments that are placed between the new floor and
the sub-floor, insulating sound and cushioning the floors. In addition, we sell flooring tools, floor cleaning
supplies and butcher block kitchen countertops.
Finishing. In order to control the quality of our Bellawood brand, we maintain a finishing facility in
Toano, Virginia. In 2013, we finished more than 26 million square feet of flooring, primarily our Bellawood
products. The quality of this process results in Bellawood hardwood products having one of the highest scuff
resistant finishes in the industry.
Our current equipment and capacity allow us to effectively finish approximately 83% of the current
Bellawood demand. To supplement the balance needed, we certify and continually monitor the finishing
processes of certain mills in both North America and South America. In 2014 and over the next several years,
we intend to invest in the equipment and processes needed to significantly enhance our capacity to finish
Bellawood products in our Toano facility.
Supply Chain. We are committed to our complete product assortment being available to meet our
customers’ expectations more timely than our competitors. We have a strategic, multi-year initiative to
optimize our supply chain, supporting our continued store base expansion while focused on continuous
improvement in the efficiency and effectiveness of our supply chain operations.
In 2013, we operated distribution facilities in Hampton Roads and Toano, Virginia, and a small facility in
Toronto, Canada. We also lease the services of a third party consolidation center in China to break bulk
shipments from mills into quantities and assortments that can be sent directly to our store locations. On
average, each store location has approximately 4,400 to 6,000 square feet of warehouse space stocked with a
combination of customer-specific inventory waiting to be picked up or delivered and inventory levels of
certain products we believe the customer expects to be immediately available. Where possible, we work with
our mills to ship certain products directly to our stores, or in rare cases, to our customers.
Our product is generally transported boxed and palletized, and the weight of our product generally
increases our supply chain costs. Our transportation costs are significant, representing 8.7% of net sales in
2013, and are impacted by international container rates, customs and duty charges, and domestic fuel costs.
Our supply chain initiatives seek the lowest rates, reductions in the number of miles traveled and the most
efficient means to minimize the total cost per mile. Transportation costs include:
• international and domestic inbound transportation to either our distribution centers or stores;
• transportation charges from our distribution centers to our stores;
• transportation charges between stores; and
• third party delivery services from our stores to our customers.
In August 2013, we reached agreements to strengthen the long-term structure of our supply chain through
the consolidation and expansion of our distribution facilities. We entered into a lease for a 500,000 square foot
distribution center in Pomona, California and agreed to purchase 110 acres of undeveloped land in Henrico
County, Virginia where we are constructing a 1.0 million square foot distribution center.
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