Lumber Liquidators 2014 Annual Report Download - page 21

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Our competitive position is also influenced by the availability, quality and cost of merchandise, labor
costs, finishing, distribution and sales efficiencies and our productivity compared to that of our competitors.
Further, as we expand into new and unfamiliar markets, we may face different competitive environments than
in the past. Likewise, as we continue to enhance and develop our product offerings, we may experience new
competitive conditions.
Some of our competitors are larger organizations, have existed longer, are more diversified in the
products they offer and have a more established market presence with substantially greater financial,
marketing, personnel and other resources than we have. In addition, our competitors may forecast market
developments more accurately than we do, develop products that are superior to ours or produce similar
products at a lower cost, or adapt more quickly to new technologies or evolving customer requirements than
we do. Intense competitive pressures from one or more of our competitors could cause price declines,
decrease demand for our products and decrease our market share.
Hardwood flooring may become less popular as compared to other types of floor coverings in the future.
For example, our products are made using various hardwood species, including rare exotic hardwood species,
and concern over the environmental impact of tree harvesting could shift consumer preference towards
synthetic or inorganic flooring. In addition, hardwood flooring competes against carpet, vinyl sheet, vinyl tile,
ceramic tile, natural stone and other types of floor coverings. If consumer preferences shift toward types of
floor coverings other than hardwood flooring, we may experience decreased demand for our products.
All of these competitive factors may harm us and reduce our net sales and operating results.
Risks Related to Our Suppliers, Products and Product Sourcing
Our ability to obtain products from abroad and the operations of many of our international suppliers are
subject to risks that are beyond our control and that could harm our operations.
We rely on a select group of international suppliers to provide us with flooring products that meet our
specifications. In 2014, approximately 40% of our product was sourced from Asia, approximately 6% was
sourced from South America and approximately 5% was sourced from Europe and Australia. As a result, we
are subject to risks associated with obtaining products from abroad, including:
• political unrest, terrorism and economic instability resulting in the disruption of trade from foreign
countries where our products originate;
• currency exchange fluctuations;
• the imposition of new laws and regulations, including those relating to environmental matters and
climate change issues; labor conditions; quality and safety standards; trade restrictions; and
restrictions on funds transfers;
• the imposition of new or different duties (including antidumping and countervailing duties), tariffs,
taxes and/or other charges on exports or imports, including as a result of errors in the classification
of products upon entry or changes in the interpretation or application of rates or regulations relating
to the import or export of our products;
• disruptions or delays in production, shipments, delivery or processing through ports of entry
(including those resulting from strikes, lockouts, work-stoppages or slowdowns, or other forms of
labor unrest); and
• changes in local economic conditions in countries where our suppliers are located.
These and other factors beyond our control could disrupt the ability of our suppliers to ship certain
products to us cost-effectively or at all, which could harm our operations.
Our ability to offer hardwood flooring, particularly products made of more exotic species, depends on the
continued availability of sufficient suitable hardwood.
Our business strategy depends on offering a wide assortment of hardwood flooring to our customers.
We sell flooring made from species ranging from domestic maple, oak and pine to imported cherry, koa,
mahogany and teak. Some of these species are scarce, and we cannot be assured of their continued
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