• Lumber Liquidators has strayed from its founding ethos and the results have been awful.
  • The LLVC investor group has been in discussion with the company on how to best improve operations.
  • LLVC has nominated Industry Expert David Hartman as a Director candidate to lead the turnaround effort.

Over the last few years, I have written many articles about Lumber Liquidators (LL). While I have praised the company on many occasions in the past, I have recently become increasingly critical of the direction in which the board and management are leading the company. From its creation, the foundation of the LL concept was very simply based on selling quality floors, at cheap prices and in large volume. This simplistic approach worked because the company operated smalls stores with limited overhead, had a high revenue to square foot ratio, and because management focused on gross profit dollars rather than obsessing over margins.

Mistakes Were Made

In recent years, new management has pivoted the sales model and the results have been nothing short of abysmal. Discounting has been curtailed, which has caused confusion for the company’s historically value-conscious customer base. Management has been focused on increasing margins, with almost no success. Competitors such as Home Depot (HD) have improved their offerings and upstarts like Floor & Decor (FND) have invaded LL’s strongholds and eroded market share. Several high profile lawsuit settlements have deteriorated the balance sheet. Moreover, management’s responses to tariffs on Chinese imports, which account for over 47% of the company’s products, were delayed and insufficient. The ultimate scorecard for any publicly traded company is the stock price, and with LL shares now trading at approximately $11, the same as the IPO price twelve years ago, it is clear that the market has lost faith in the company.

A Fresh Approach

I have formed a shareholder group (LLVC), composed of Lumber Liquidators shareholders who are eager to see meaningful, positive changes at the company. Myself and other members of this group have been in communication with the company over the last few months. We have spoken with many industry insiders, marketing experts, sourcing professionals and turnaround leaders. With this knowledge, we have created a comprehensive turnaround plan which we believe will enable the company to once again compete effectively and deliver growth and profits.

It is against this backdrop that I would like to share with the investing community some recent developments which I believe are likely to create shareholder value and improve performance at the company.

LLVC Director Nomination

On June 19, 2019, the Lumber Liquidators Value Committee (LLVC), led by activist investor Mario Rizzi, nominated David Hartman as an independent candidate for appointment to the Board of Directors of Lumber Liquidators, to be introduced as part of the company’s Board Refreshment Program. LLVC members are deemed to beneficially own, in the aggregate, approximately 4.2% of Lumber Liquidators’ outstanding common stock. Members have pledged to vote their shares toward proposals which will improve company performance, enhance corporate governance and create shareholder value.

About David Hartman

Mr. Hartman has a profound knowledge of the flooring industry, including LL’s key competitors, having worked in executive positions at several large companies in the building products sector. He led the turnaround and eventual sale of Pergo North America in 2013. Mr. Hartman also provided strategic guidance to LL after the laminate scandals and is very familiar with the issues the company faces. As a consultant, he advises private equity and hedge funds active in the flooring industry. The board would deeply benefit from Mr. Hartman’s industry experience and he would play a pivotal role in Lumber Liquidators’ turnaround effort.

In nominating Mr. Hartman for appointment to the board, LLVC believes Lumber Liquidators’ enormous potential can finally be realized. Not only does he have experience in turning around companies in the building materials industry, but he brings a knowledge of the flooring retail space which is deeply lacking on the Lumber Liquidators’ board. His experience would be instrumental in improving corporate governance by creating a framework of defined and quantifiable goals for management in order to effectively measure their progress. Mr. Hartman would help management identify the company’s core strategic advantages in the marketplace which would enable the company to effectively compete and gain market share in a highly fragmented industry. Furthermore, while many current LL directors have served for a substantial number of years, as a new member, Mr. Hartman would bring fresh ideas to the board and reinvigorate the planning on how to best grow the business for the future.

As part of the existing board refreshment plan at Lumber Liquidators, LLVC demands that Mr. David Hartman be appointed as a board director, without delay. The director candidate proposed by LLVC holds the experience and skill sets required by the company but currently absent at the board level. The board must act in the best interests of all shareholders and it is clear that a candidate of this caliber, with extensive history, experience and knowledge will be highly beneficial to the company.


I am sure I speak for all Lumber Liquidators shareholders when I say that despite the many adversities the company has faced, both exogenous and self-inflicted, the business has great potential and at the current share price presents a compelling value. The most pressing factor now is to clearly define a path forward and to create and execute a turnaround strategy. David Hartman has the proven experience and knowledge to drive the LL board toward meaningful positive changes which will lead to substantial operational improvements. Considering the financial situation of the company and the economy, and the many factors obscuring the short-term industry visibility, it is of the utmost importance that Mr. Hartman be given an opportunity to showcase his talents in a director position without further delay.

LLVC remains committed to working with the company, the board and shareholders toward exploring all options to drive sustainable and sizable value creation at Lumber Liquidators. For more information about LLVC or to become a member, simply click this link.

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