Lumber Liquidators 2014 Annual Report Download - page 29

Failure to maintain relevant product endorsement agreements and product placement arrangements could
harm our reputation and cause our net sales to deteriorate.
We have established relationships with well-known and respected home improvement celebrities to
evaluate, promote and help establish with consumers the high-quality nature of our products. If these
individuals were to stop promoting our products, if we were unable to renew our endorsement contracts with
them or if we could not find other endorsers of a similar caliber, our net sales and reputation could be
harmed. Similarly, any actions that persons endorsing our products may take, whether or not associated with
our products, which harm their or our reputations could also harm our brand image with consumers and our
reputation, and cause our net sales to deteriorate. We also have a number of product placement arrangements
with home improvement-related television shows. We rely on these arrangements to increase awareness of our
brands, and to enable potential customers to see both what our flooring will look like after installation and the
relative ease with which it can be installed. Any failure to continue these arrangements could cause our brands
to become less well-known and cause our net sales to deteriorate.
We may not be able to adequately protect our intellectual property, which could harm the value of our
brands and impact our business.
Our intellectual property is material to the conduct of our business. The successful implementation of
our business plan successfully depends in part on our ability to further build brand recognition using our
trademarks, service marks and other proprietary intellectual property, including our name and logo and the
names and logos of our brands. We may incur significant costs and expenses relating to our efforts to enforce
our intellectual property rights. If our efforts to protect our intellectual property are inadequate, or if any
third party infringes on or misappropriates our intellectual property, the value of our brands may be harmed,
which could adversely affect our business and might prevent our brands from achieving or maintaining market
acceptance.
We may initiate claims or litigation against parties for infringement of our intellectual property rights or
to establish the invalidity, non-infringement, or unenforceability of the proprietary rights of others. Likewise,
we may have similar claims or litigation brought against us by competitors and others. Under either situation
and regardless of any ultimate determination on the merits, we could incur significant expense and be forced
to divert the efforts of key employees from our operations. Moreover, such claims or litigation could harm our
image, brand or competitive position and cause us to incur significant penalties and costs.
Risks Relating to Our Common Stock
Our common stock price may be volatile and all or part of any investment in our common stock may
be lost.
The market price of our common stock could fluctuate significantly. Those fluctuations could be based on
various factors in addition to those otherwise described in this report, including:
• our operating performance and the performance of our competitors;
• the public’s reaction to our filings with the SEC, our press releases and other public announcements;
• changes in recommendations or earnings estimates by research analysts who follow Lumber
Liquidators or other companies in our industry;
• variations in general economic conditions;
• actions of our current stockholders, including sales of common stock by our directors and executive
officers;
• the arrival or departure of key personnel; and
• other developments affecting us, our industry or our competitors.
In addition, the stock market may experience significant price and volume fluctuations. These fluctuations
may be unrelated to the operating performance of particular companies but may cause declines in the market
price of our common stock. The price of our common stock could fluctuate based upon factors that have little
or nothing to do with our company or its performance.
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