Lumber Liquidators 2015 Annual Report Download - page 27

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 and DIFM
consumers. While our marketing strategy continues to support our real estate strategy and remains focused on
retaining the DIY and DIFM customers, 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.
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 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;
• unfavorable market reactions to allegations regarding the safety of our products and the related
litigation and/or government investigations resulting therefrom, as well as any payments, judgments
or other losses in connection with such lawsuits and/or investigations;
• 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
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