冒險

 largest specialty retailer of hardwood flooring in the United States with 256 stores operating in 46 states as of December 31, 2011

offer an extensive selection of premium hardwood flooring products under multiple proprietary brands at everyday low prices designed to appeal to a diverse customer base

purchase our products directly from mills or associated brokers. We believe that our vertically integrated business model, operating as a single business segment, enables us to offer a broad assortment of high-quality products to our customers at a lower cost than our competitors.

hardwood flooring market that is highly fragmented

our Bellawood brand is known as a premium flooring brand within the industry.

founded in 1994

 able to maintain these prices across our product range because we generally purchase flooring directly from mills. In addition, we operate a low-cost store model with locations in areas that carry lower rent expense than many retail stores.

currently finish at our Toano facility approximately 79% of our premium Bellawood products, which now carry a 100-year, transferable warranty.

We maintain an in-house inspection and quality control function and enforce strict certification requirements for Bellawood supplier mills

Residential customers are generally less familiar with the range of products available and with the purchase process itself.

grown primarily through share gains in a highly fragmented wood flooring market that we estimate has contracted approximately 13.5%.

home-related discretionary spending has been weakened by a difficult economic environment

due to the average size of the sale and the general infrequency of a hardwood flooring purchase, many of our customers conduct extensive research using multiple channels before making a purchase decision

Our average sale was approximately $1,560 in 2011. We define “average sale” as the average invoiced sale per customer, measured on a monthly basis and excluding transactions of less than $250 (which are generally sample orders, or add-ons or fill-ins to previous orders) and of more than $30,000 (which are usually contractor orders).

We enter into short leases, generally for base terms of five years, with renewal options to maximize our real estate flexibility.

We believe that our store design and locations reinforce our customers’ belief that they get a good deal when they buy from us. [NOT NECESSARILY SO OF COURSE]

A typical store staff consists of a manager and two to three associates, with a compensation structure generally weighting sales-driven bonuses over a relatively low base salary.

By generally requiring a 50% deposit when an order is placed for product not taken home that day, we reduce store-level working capital requirements

our average new store has historically become profitable within months of beginning operations and generally returned its initial cash investment within the first year.

we do not provide flooring installation, we have a national installation arrangement with The Home Service Store, Inc. … we minimize risk associated with installation services and reduce time spent by store managers on installation service issues. [HEY, WE JUST SOLD YOU THE FLOOR WE DIDN’T INSTALL IT, CALL THEM]

We offer our residential customers a financing alternative through a proprietary credit card, the Lumber Liquidators credit card, underwritten by GE Money Bank at no recourse to us. 

We offer our commercial customers a financing alternative through the Lumber Liquidators Commercial Credit Program, A Credit Line for Pros. This program is underwritten by BlueTarp Financial, Inc., generally at no recourse to us.

We have long-term relationships with respected, well-known home improvement celebrities Bob Vila and Ty Pennington. Bob Vila, in particular, has been associated specifically with our Bellawood proprietary brand for several years. We work with Ty Pennington on a proprietary line of flooring branded as the Ty Pennington Collection. [THIS OLD CELEBRITY PITCHMAN?]

We seek to appeal to customers who desire a high-quality product at an attractive value, and are willing to travel to less convenient locations to get it. We sell our products principally to existing homeowners, who we believe represent over 90% of our consumer count. Historically, these homeowners are in their mid-30’s or older, are well-educated and have been living in their homes for at least several years.

over half of hardwood flooring purchases are made by households with incomes levels above the average domestic household.

Most of our other sales are to contractors, who are primarily small businesses that are either building a small number of new homes or have been hired by an owner to put in a new floor.

we offer nearly 350 different flooring product stock-keeping units. [PARADOX OF CHOICE]

Engineered flooring is designed primarily to be installed in areas where traditional hardwood is not conducive, such as slab construction, basements and areas where moisture may be a factor.

Our laminate flooring brands allow for easy-click installation, and some include a pre-glued undersurface, moisture repellent, soundproofing, single-strip format or a handscraped textured finish. [100% OF THE FLOORING IN CHINA IS THIS JUNK]

Bellawood products have one of the highest scuff resistant finishes in the industry as measured by the Taber Abrasion Test

We currently purchase products from approximately 120 domestic and international vendors, which are primarily mills or trading companies.

Trading companies contract with mills, located primarily in China, to produce quality products to our specifications, work on our behalf to control quality at the mill locations and handle certain other matters.  [I WONDERED WHEN CHINA WOULD SHOW UP]

In 2011, one of the trading companies, Sequoia Floorings Inc. (“Sequoia”), provided services on approximately one-third of our merchandise purchases, primarily in Asia. In September 2011, we entered into an agreement to acquire certain assets of Sequoia relating to Sequoia’s quality control and assurance, product development, claims management and logistics operations in China. [THERE’S THAT ‘VERTICAL INTEGRATION’]

In 2011, approximately 42% of our product was sourced from Asia, 50% from North America, 7% from South America and 1% from other locations, including Europe and Australia

In 2011, approximately 77% of our purchases were received by central distribution and 23% were received directly at a store location, shipped from either a vendor-mill or our leased consolidation center in China. The China consolidation center allows Chinese mills to ship bulk quantities of products to the consolidation center in Shanghai, where our product allocation department determines an appropriate mix of a number of products to be packed in a single container and shipped directly to a store location. [WONDER WHERE IT AL COMES FROM? BURMA? INDONESIA?]

the hardwood flooring market represents approximately 10% of the overall U.S. floor coverings market, which includes carpet and area rugs, hardwood and softwood flooring, ceramic and stone floor and wall tile, resilient sheet and floor tile, and laminate flooring.

we estimate that the hardwood flooring market has contracted approximately 13.5% since 2008. [THAT’S A CRASH]

 the 2011 retail value of U.S. hardwood and laminate flooring was approximately $3.5 billion and $1.8 billion, respectively, with the residential replacement market representing approximately 75% to 80%.

The residential replacement wood flooring market is dependent on home-related, large-ticket discretionary spending, which is influenced by a number of complex economic and demographic factors that may vary locally, regionally and nationally. [NICE SENTENCE]

Many of the economic indicators associated with the wood flooring market and generally associated with consumer discretionary spending remain weak. Though we believe we have seen signs of stabilization at historically low levels, we expect the wood flooring market to remain in a weakened state throughout 2012.

Lumber Liquidators, Home Depot and Lowes together represent approximately 37% of hardwood flooring retail sales. The remainder of the market consists predominantly of regional and local independent retailers and smaller national chains which specialize in the lower-end, higher-volume flooring market and offer a wide range of home improvement products other than flooring.

As of December 31, 2011, we had 1,302 employees, 97% of whom were full-time and none of whom were represented by a union. 

certain of our products are subject to laws and regulations relating to the importation, acquisition or sale of illegally harvested plants and plant products and the emissions of hazardous materials.