Customers can find their floors at Lumber Liquidators Holdings. Known for its low prices, Lumber Liquidators is one of the nation's largest retailers of hardwood flooring. It sells more than 25 domestic and exotic species of hardwoods from more than 220 Lumber Liquidators stores in about 45 states and Canada, online, by catalog, and from its Virginia call center. The company also offers antique and reclaimed boards, laminate flooring, moldings, and installation products. Its brands include Bellawood, Builder's Pride, Schön, Morning Star, and Virginia Mill Works. Homeowners represent about 90% of Lumber Liquidators' customer base. The company was founded in 1993 by chairman Tom Sullivan.
Lumber Liquidators markets itself as a supplier of premium hardwoods and flooring products with a cost-effective retail format. Typically situated in low-rent commercial and industrial districts, its stores average about 6,500 sq. ft. They allot up to 1,000 sq. ft. for the showroom area, which spotlights flooring samples on racks and as part of the showroom floor. The warehouse area takes up the remaining space, stocking a combination of high-volume products with the most popular items at that particular location.
The company has rapidly expanded its retail footprint in recent years. In both 2009 and 2010 Lumber Liquidators opened about 35 stores. It plans to continue adding 40 to 50 locations annually in new and existing markets for the next several years as part of its growth strategy. (This brisk approach has allowed the company to roughly double its store count since the start of 2008, when it operated just 116 locations.) During 2011 Lumber Liquidators extended its network north of the US border, opening its first Canadian locations in Ontario.
As Lumber Liquidators' bricks-and-mortar presence has expanded, so have its net sales. New locations and slightly higher same-store sales boosted revenue to $620 million in 2010, a more than 10% improvement from 2009. The company attributed the gain to a greater number of invoiced customers; its average retail sale in 2010 declined from the year before (to $1,520 from $1,560) as more customers bought less expensive products. Also during this time, Lumber Liquidators' bottom line stayed relatively flat at $26 million. The company has been investing in its infrastructure to support continued expansion in recent years, including refining its product selection, improving logistics, and providing training to store managers. In 2010 it launched an integrated software system that offers enhancements for its existing point-of-sale, merchandising, store operations, and inventory control systems. (Lumber Liquidators said it faced decreased productivity while the integrated system was rolled out, however, and could not adequately serve customers during the second half of the year.)
At the end of 2009 the company reorganized its operations, adopting a holding company structure and changing its name from Lumber Liquidators to Lumber Liquidators Holdings. The company decided to restructure itself so it could better mitigate risk and more efficiently manage employees' compensation and benefits.
Because of its size, Lumber Liquidators believes it can obtain better prices from its suppliers, which helps to keep costs under control and ensures a competitive edge. The company purchases its products from about 90 vendors (mostly mills and trading companies) in the US and abroad, however, the Sequoia Floorings trading company handles more than a third of Lumber Liquidators' purchases. About 40% of Lumber Liquidators' products come from North America, and some 45% are sourced from the Asia/Pacific region.
High-profile endorsements and product placements have been good for Lumber Liquidators' business. These include nods from home improvement celebrities Bob Vila and Ty Pennington, as well as positioning on ABC's Extreme Makeover: Home Edition and HGTV's Dream House Sweepstakes. The company also sponsors the Lumber Liquidators Professional Bowlers Association Tour.
Chairman Sullivan owns more than 10% of the company. Investment giant FMR holds a roughly 15% stake. – less