Lumber Liquidators 2014 Annual Report Download - page 27

We have entered into a number of lease agreements with companies controlled by our founder and this
concentration of leases may pose certain business risks.
As of December 31, 2014, we lease our Toano facility, which includes a store location, and 30 of our
other store locations from entities owned, in whole or in part, by Tom Sullivan, our founder and current
chairman of our board of directors. Although our percentage of total stores leased from such entities has
decreased over the last year, this concentration of leases subjects us to risk in the event action or inaction by
Tom or such entities impacts our leasehold interests in the locations.
Risks Related to Our Information Technology
If our management information systems experience disruptions, it could disrupt our business and reduce
our net sales.
We depend on our management information systems to integrate the activities of our stores, website and
call center, to process orders, to respond to customer inquiries, to manage inventory, to purchase merchandise
and to sell and ship goods on a timely basis. We may experience operational problems with our information
systems as a result of system failures, viruses, computer ‘‘hackers’’ or other causes. We may incur significant
expenses in order to repair any such operational problems. Any significant disruption or slowdown of our
systems could cause information, including data related to customer orders, to be lost or delayed, which could
result in delays in the delivery of products to our stores and customers or lost sales. Moreover, our entire
corporate network, including our telephone lines, is on an Internet-based network. Accordingly, if our network
is disrupted, we may experience delayed communications within our operations and between our customers
and ourselves, and may not be able to communicate at all via our network, including via telephones connected
to our network.
The selection and implementation of information technology initiatives may impact our operational
efficiency and productivity.
In order to better manage our business, we expect to invest in our information systems. In doing so, we
must select the correct investments and implement them in an efficient manner. The costs, potential problems
and interruptions associated with implementing technology initiatives could disrupt or reduce the efficiency of
our operations. Furthermore, these initiatives might not provide the anticipated benefits or provide them in
a delayed or more costly manner. Accordingly, issues relating to our selection and implementation of
information technology initiatives may negatively impact our business and operating results.
Any disruption of our website or our call center could disrupt our business and lead to reduced net sales
and reputational damage.
Our website and our call center are integral parts of our integrated multi-channel strategy. Customers use
our website and our call center as information sources on the range of products available to them and to order
our products, samples or catalogs. Our website, in particular, is vulnerable to certain risks and uncertainties
associated with the Internet, including changes in required technology interfaces, website downtime and other
technical failures, security breaches and consumer privacy concerns. If we cannot successfully maintain our
website and call center in good working order, it could reduce our net sales and damage our reputation.
Further, the costs associated with such maintenance may exceed our estimations.
We may incur costs and losses resulting from security risks we face in connection with our electronic
processing, transmission and storage of confidential customer information.
We accept electronic payment cards for payment in our stores and through our call center. In addition,
our online operations depend upon the secure transmission of confidential information over public networks,
including information permitting cashless payments. As a result, we may become subject to claims for
purportedly fraudulent transactions arising out of the actual or alleged theft of credit or debit card information,
and we may also be subject to lawsuits or other proceedings relating to these types of incidents. Further, a
compromise of our security systems that results in our customers’ personal information being obtained by
unauthorized persons could adversely affect our reputation with our customers and others, as well as our
operations, results of operations and financial condition, and could result in litigation against us or the
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