Lumber Liquidators 2014 Annual Report Download - page 28

imposition of penalties. A security breach could also require that we expend significant additional resources
related to the security of information systems and could result in a disruption of our operations, particularly
our online sales operations.
Additionally, privacy and information security laws and regulations change, and compliance with them
may result in cost increases due to necessary systems changes and the development of new administrative
processes. If we fail to comply with these laws and regulations or experience a data security breach, our
reputation could be damaged, possibly resulting in lost future business, and we could be subjected to
additional legal risk as a result of non-compliance.
Risks Related to Our Personnel
Our success depends substantially upon the continued retention of certain key personnel.
We believe that our success has depended and continues to depend to a significant extent on the efforts
and abilities of our senior management team. The loss, for any reason, of the services of any of these key
individuals and any negative market or industry perception arising from such loss, could damage our business
and harm our reputation.
Our success depends upon our ability to meet our labor needs.
Our success depends in part on our ability to attract, hire, train and retain qualified managers and
associates. Buying hardwood flooring is an infrequent event, and typical consumers have very little knowledge
of the range, characteristics and suitability of the products available to them before starting the purchasing
process. Therefore, consumers in the hardwood flooring market expect to have sales associates serving them
who are knowledgeable about the entire assortment of products offered by the retailer and the process of
choosing and installing hardwood flooring. As a result, competition for qualified store managers and sales
associates among flooring retailers is intense. We may not succeed in attracting and retaining the personnel we
require to conduct our current operations and support our potential future growth. In addition, as we expand
into new markets, we may find it more difficult to hire, motivate and retain qualified employees.
Although none of our employees are currently covered under collective bargaining agreements, we cannot
guarantee that our employees will not elect to be represented by labor unions in the future. If some or our
entire workforce were to become unionized and collective bargaining agreement terms were significantly
different from our current compensation arrangements or work practices, it could have a material adverse
effect on our business and operating results.
Risks Relating to Our Marketing and Advertising
Our success depends on the effectiveness of our advertising strategy.
We believe that our growth was achieved in part through our successful investment in local and national
advertising. Historically, we have used extensive advertising to encourage customers to drive to our stores,
which were typically located some distance from population centers in areas that have lower rents than
traditional retail locations. Further, a significant portion of our advertising was directed at the DIY consumer.
While our marketing strategy continues to support our real estate strategy and remains focused on retaining
the DIY customer, we have broadened the reach and frequency of our advertising to increase the recognition
of our value proposition and the number of customers served. We may need to further increase our advertising
expense to support our business strategies in the future. If our advertisements fail to draw customers in the
future, or if the cost of advertising or other marketing materials increases significantly, we could experience
declines in our net sales and operating results.
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