Lumber Liquidators 2014 Annual Report Download - page 20

Item 1A. Risk Factors.
The risks described below could materially and adversely affect our business, results of operations,
financial condition and cash flows. These risks are not the only risks that we face. Our business operations
could also be affected by additional factors that apply to all companies operating in the U.S. and globally, as
well as other risks that are not presently known to us or that we currently consider to be immaterial.
Risks Related to Economic Factors and Our Industry
Changes in economic conditions may adversely impact demand for our products, reduce access to credit
and cause our customers and others with whom we do business to suffer financial hardship, all of which
could adversely impact our business, results of operations and financial condition.
Our business, financial condition and results of operations have and may continue to be affected by
various economic factors. Changes in the current economic environment and uncertainty about the future
could lead to reduced consumer and business spending, including by our customers. Such changes may also
cause customers to shift their spending to products we either do not sell or do not sell as profitably. Further, a
reduced access to credit may adversely affect the ability of consumers to purchase our products. This potential
reduction in access to credit may impact our ability to offer customers credit card financing through third
party credit providers on terms similar to those offered previously, or at all. In addition, economic conditions,
including decreased access to credit, may result in financial difficulties leading to restructurings, bankruptcies,
liquidations and other unfavorable events for our customers, suppliers and other service providers. If such
conditions deteriorate, our industry, business and results of operations may be severely impacted.
The hardwood flooring industry depends on the economy, home remodeling activity, the homebuilding
industry and other important factors.
The hardwood flooring industry is highly dependent on the remodeling of existing homes and new home
construction. In turn, remodeling and new home construction depend on a number of factors which are beyond
our control, including interest rates, tax policy, employment levels, consumer confidence, credit availability,
real estate prices, demographic trends, weather conditions, natural disasters and general economic conditions.
For example, discretionary consumer spending could be limited, spending on remodeling of existing homes
could be reduced and purchases of new homes could decline if:
• the national economy or any regional or local economy where we operate weakens;
• interest rates rise;
• credit becomes less available;
• tax rates and health care costs increase;
• regions where we operate experience unfavorable demographic trends;
• fuel costs or utility expenses increase; or
• home prices depreciate.
In the event of a decrease in discretionary spending, home remodeling activity or new home construction,
demand for our products, including hardwood flooring, could be impacted negatively and our business and
operating results could be harmed.
Competition could cause price declines, decrease demand for our products and decrease our market share.
We operate in the wood flooring industry, which is highly fragmented and competitive. We face
significant competition from national and regional home improvement chains, national and regional specialty
flooring chains, Internet-based companies and privately-owned single-site enterprises. We compete on the basis
of price, customer service, store location and range, quality and availability of the hardwood flooring that we
offer our customers. If our positioning with regard to one or more of these factors should erode, deteriorate,
fail to resonate with consumers or misalign with demand or expectations, our business and results may be
impacted negatively.
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