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Investor Group Nominates Industry Expert For Lumber Liquidators Board

  • 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.

Summary

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.

Let’s Rebuild LL. Together We Can Turn This Company Around

Join Our Proxy Fight to ReBuild LL

By |2019-07-02T11:13:35-04:00July 2nd, 2019|Uncategorized|0 Comments

Lumber Liquidators vs Bitcoin

On December 18, 2017, Bitcoin hit and All Time High of $20,089.

On December 18, 2017, Lumber Liquidators was trading at $30.05. 

Today, June 21, 2019, Bitcoin is trading at $9,884, losing about 50% of it’s value.

Meanwhile,

Today, June 21, 2019, Lumber Liquidators is trading at $10.70, losing about 65% of it’s value.

You would have been better off buying a worthless, fictitious thing like Bitcoin, at its all time high, rather than buying  shares in a company like Lumber Liquidators.

And while the S&P 500 stock exchange just closed at an all time high, Lumber Liquidators is near an all time low.

LL management is confident that they have a plan for generating profits and growth, but clearly, they have been unable to execute on that plan (or even say what the plan is) and the market is not buying any of their “talk.”

Let’s Change Management at LL and Finally Turn This Company Around

Join Our Proxy Fight to ReBuild LL

By |2019-06-21T09:38:35-04:00June 21st, 2019|Uncategorized|0 Comments

LLVC Demands That LL Executives and Board Purchase Shares in Open Market

While shares of LL continue to slide, hitting an almost historic low of under $9.60, management and the board of directors remain silent. Some shareholders might be surprised by the stunning fact that not a single member of management or the board has purchased any shares in the company in many years, despite the abysmally low stock price. This confirms our thinking that neither management, nor the board really cares about shareholders or how the company shares are performing, simply because they have no equity in this “game.”

Certainly, company insiders have been able to accumulate shares in the company over the years, but all of those shares have been granted freely, as part of equity compensation. There have been no open market purchases with cash, in…. maybe half a decade.

LLVC demands that all company named executives and board members immediately initiate open market cash purchases of the company shares. This will not only provide price support, but also re-affirm that the company insiders have faith in the company and in their own ability to drive profitable growth going forward.

Of course, these small purchases by insiders will not compensate the thousands of investors who have collectively lost millions of dollars due to the missteps and follies of leadership, but it can perhaps provide them some solace in knowing that any future losses in equity value will be shared, to some degree, with management.

Buy the Shares, but Sell the Management – Turn This Company Around

Join Our Proxy Fight to ReBuild LL

By |2019-06-03T10:23:10-04:00June 3rd, 2019|Uncategorized|0 Comments

Lumber Liquidators Proxy Shows Shareholder Unrest

Summary
  • The Proxy Vote For Proposal #4 Passed By A Slim Margin.
  • Votes Against and Abstentions Are at Record Highs.
  • LLVC Demands 2 Director Seats to Refresh The Board.

The Lumber Liquidators (LL) Annual Shareholder Meeting was held on May 22, 2019. There were 4 proposals up for vote. As I have stressed in my various articles, these proposals were unfavorable to shareholders and I actively recommended that all LL shareholders vote against them. Of special note was Proposal #4, which would dilute the share base by over 6% in order to give more stock based compensation to management and the board.

The votes have been tabulated. All of management’s proposals passed, but Proposal #4 was ratified by a very slim margin.

Poor Support For Proposal #4

Proposal #4 Equity Compensation Plan (Source)

Votes For Votes Against
7,487,860 6,128,179

Fundamentally, if only 680k votes (2.4% of outstanding shares) had swung from voting “Yes” on Prop #4 to voting “No”, the proposal would have failed. Looking at the results further, out of the 28.6 million outstanding shares in the company, only about 1/4 voted for Proposal #4. It’s a victory for the Board, but it’s hardly decisive.

Despite losing this battle, we consider the effort to make changes at the Board and management level well on track. So far, using minimal effort, my group has been able to generate a huge amount of interest in our plan to turn this company around. Holders of the 6.1 million shares which were voted against Proposal #4 recognized the egregious nature of the proposal. The Lumber Liquidators Value Committee (LLVC) played a central role in bringing awareness to its many flaws.

Poor Showing For Weak Director Candidates

Another proxy proposal, Proposal #1, was for the election of two Board directors at the company. These company-recommended directors were elected, but the withheld votes were the highest on recent record. Again, although the directors were elected, LLVC played an important role in rallying the dissenting votes as seen below:

Proposal #1 Director Candidates (Source)

Director For Withheld
Terri Funk Graham 12,814,964 1,504,005
Famous P. Rhodes 12,650,494 1,668,475

Typically, Director candidates at LL receive only 1 or 2 hundred thousand withheld votes. The dissenting vote count in the most recent proxy was much larger, increasing by over 1 million votes, clearly revealing shareholder frustration and support for our “Vote No” campaign.

Highest Against Vote Ever, Against Executive Compensation

As part of the LLVC “Vote No” campaign, we wanted shareholders to vote against excessive executive compensation. This has been a hot topic at Lumber Liquidators, as the company has been under-performing for years while the CEO and the executive team receive substantial bonuses, equity compensation and even base salary pay increases ostensibly based on “merit.” This advisory proposal was passed, but a record 2.8 million votes were cast against.

Proposal #3 Advisory Resolution on Executive Compensation (Source)

For Against
10,777,828 2,821,667

A Protest Vote

Another interesting voting result is shown for Proposal #2 concerning the selection of the auditor for the company. Normally speaking, the auditor selection is a simple procedural proposal for which hardly anybody should have reason to oppose. In order to show our strength I asked all LLVC members to vote against this proposal and many did just that. 1.3 million votes were cast against this mundane proposal, far higher than the usual “Against” votes of just a few thousand.

The Board Pays to Influence the Vote

It should also be noted that the degree of shareholder opposition to Proposal #4 as well as the other proposals on the proxy forced the board to hire an outside advisory firm in order to solicit favorable votes from shareholders. This was necessary in order to influence the proxy vote outcome.

The company used shareholder money to pay for this advisory firm. I believe this practice was unethical, considering the fact that Proposal #4 is substantially dilutive to the share base. Furthermore the director candidates which the company proposed have no experience in flooring sales, building material retailing or business turnarounds. It is difficult for me to see how these candidates will effect positive changes at the company, considering that they have only vague experience in retailing, and no work experience at any company like Lumber Liquidators.

Proxy Fight Continues

Confirmed members of LLVC presently control approximately 5% of the outstanding shares in the company, and I can confirm that our membership is increasing since the vote, as the stock price has careened lower, dipping into the single digits. We are reaching out to institutional investors as they will be helpful not only in future vote counts, but in order to influence management changes in the short term.

Progress in our proxy fight continues. Last week, LLVC proposed two new director candidates to the company as part of our demand for representation at the board level. We have asked that these candidates be integrated into the board via the board refreshment program. We are awaiting news on this progress.

We intend to make the names of these highly skilled candidates public shortly. One candidate has a deep history in flooring retailing with detailed expertise in low cost flooring sourcing in Asia and South America. This is obviously a qualification desperately needed in these times of increasing tariffs. Our other candidate has worked as an executive at some of the largest flooring companies in America and has specific expertise in turning around struggling businesses. He would play a pivotal role in any future turnaround at Lumber Liquidators.

Our hope is that we can engage with management and the Board in a meaningful way in the coming weeks in order to work towards changing the downward trajectory of Lumber Liquidators. LLVC continues to rally support among shareholders and we remain unwavering in our fight for the necessary changes to restore shareholder trust, create value and drive profits and growth at Lumber Liquidators.

Let’s Change Management at LL and Finally Turn This Company Around

Join Our Proxy Fight to ReBuild LL

By |2019-06-03T10:25:24-04:00June 3rd, 2019|Uncategorized|0 Comments

Knowles Meets With Tilson – Shareholders Should be Enraged

Lumber Liquidators shareholders might be surprised to know that yesterday, Thursday, May 30, 2019, Whitney Tilson held a meeting with Lumber Liquidators CEO Dennis Knowles. Tilson is a short-seller whom you will all recall was responsible for the dubious scandals which hit the company in 2015 resulting in billions of dollars of losses to investors. A year later, he actually lost a lawsuit against the company and his group was forced to pay LL $100k.

Whitney Tilson, the man responsible for billions of dollars in shareholder losses at Lumber Liquidators, was actually invited into the company and met with CEO Dennis Knowles and others, for 2 hours.

Of course, the only person who comes even close to Tilson in terms of destruction of shareholder value at LL is Dennis Knowles. Perhaps it is fitting that these two meet. But undoubtedly, it is a slap in the face to all Lumber Liquidators shareholders that the CEO of the company and members of the management team actively engaged with this character.

You can get more info about this meeting here.

I call on all investors to contact Lumber Liquidators investor relations immediately to voice your anger with management and the board, not only for their unwavering degree of incompetence (stock has lost 70% of it’s value in the last 20 months), but for this latest act of egregious disrespect of shareholders.

Investor Relations:

Let’s Change Management at LL and Finally Turn This Company Around

Join Our Proxy Fight to ReBuild LL

By |2019-05-31T17:16:13-04:00May 31st, 2019|Uncategorized|3 Comments

Dennis Knowles – Slashing Advertising and Stalled Sales

After covering the mess Knowles and the management team has done with “mitigating” tariffs, I think it’s a good idea to look into the absolute disaster in the marketing department. For the home players, you should know that Knowles and Co. have mentioned their focus on Pro customer and their installation program non-stop for the past 2 years. But oddly enough, when you look at the company’s financials, same store sales are barely moving up at all, and last quarter, they were negative. And for the rest of 2019, we will be lucky to be positive at all. How could that be, if Pro and Install are doing so well? It’s because Lumber Liquidators’ DIY consumer sales, which has historically been the core market, and main growth driver, are dropping.

But why are DIY sales dropping?

There are 2 main reasons

  1. The advertising budget has been slashed.
  2. The advertising sucks.

For today, let’s just talk about problem #1

Slashed Advertising Budget

The following chart shows historic LL ad spends by year.

2010 – $49,797

2011 – $52,345

2012 – $58,548

2013 – $75,506

2014 – $82,604

2015 – $77,455 – Drop due to lower sales (scandals, etc…)

2016 – $80,079 – Rebound due to increasing sales after scandals.

2017 – $76,586 – Knowles becomes CEO….

2018 – $74,242 – Knowles cuts ad spending again!

2018 – Q3 – Sales miss estimates by a wide margin.

2018 – Q4 – Sales miss estimates again.

2019 – Q1 – SSS are negative…

Ad spending in 2018 was the lowest in 6 years. Of Course, Knowles said that cutting ad spending was a good thing, because he was going to spend those ad dollars more efficiently. But same store sales dropped in Q1 2019. And in Q3 2018, sales missed targets by a wide margin, coming in at only 2.1% while analysts were projecting 4.9%. And the stock collapsed on the news. Q4 2018 sales missed too. And Q1 2019 same store sales were actually negative.

Knowles vs Knowles

Excerpt from Q1 2018 Conference Call (source)

Seth M. Basham – Wedbush Securities, Inc.

You referenced some changes in your promotional programs. You’re expecting strong promotional programs going forward. Could you give us a little bit more color as to what you’re planning for the balance of the year?

Dennis R. Knowles – Lumber Liquidators Holdings, Inc.

Seth, I’m sure my competition would like to know that too.

Dennis, if you’re competitors want to know what your “secret sauce” is, it’s only because they want to avoid repeating your mistakes. The only thing that competitors would learn from your fiasco, is what not to do.

Seth M. Basham – Wedbush Securities, Inc.

Fair enough. So, as we look at the buckets of advertising spend and promotional dollars, do you expect both of those to be up for the year or how are you planning those going forward to drive the traffic that you’re looking for?

Martin D. Agard – Lumber Liquidators Holdings, Inc.

Yeah. I mean, up a little bit, I would say, yes.

Dennis R. Knowles – Lumber Liquidators Holdings, Inc.

I think you might see the dollars move around the buckets. You’ll see – my plan is to increase dollars, but not necessarily to increase a percent of – I mean, it’s got to work. And so, we don’t want to drive – we want to keep our ratio as flat as possible, but we will increase dollars. And we will test a fair amount this year as it relates to some of the digital capabilities, but we still expect to leverage total SG&A and we’ll just be leaning into our advertising spend.

Dennis clearly said in Q1 2018 that he would “increase dollars” spent on advertising. Yet, advertising dropped in 2018, and it led to a huge sales miss in 2018 and that sales miss is continuing in 2019, as the stock craters. Dennis blatantly lied.

In the Q2 Conference Call Dennis Knowles repeated: (source)

Dennis R. Knowles – Lumber Liquidators Holdings, Inc.

I did mention last quarter that we would likely be more assertive with our advertising dollars in 2018 now that our basic infrastructure is in place.

But in Q3, Dennis had this to say (Source)

Dennis R. Knowles – Lumber Liquidators Holdings, Inc.

So, we tweaked advertising down slightly and tested some advertising initiatives we’ve been eager to try.

We are working tirelessly to improve our intelligence around advertising.

Analysts were quick to pick up on the link between the drop in advertising and the drop in traffic.

Seth M. Basham – Wedbush Securities, Inc.

My first question is around traffic. It seems like traffic has been a challenge for you guys recently. You called out a number of issues why it might be, but as you think about tweaking the price and promotion and advertising strategies going forward, do you expect to have a meaningful impact in turning around the traffic declines in the near-term?

Dennis R. Knowles – Lumber Liquidators Holdings, Inc.

I would say, as kind of Marty mentioned in his remarks, we’ve looked at traffic really hard over the last, I guess, really over the course of the last three quarters. And we have seen as he mentioned some changing dynamics and that’s impacted by how we promote. And if you we deep into price and not so wide in breadth, we typically can influence traffic, but we just haven’t been happy with the margin. Typically, I would say, historically, we’ve had what I would call more deal-focused promotions as opposed to really kind of advertising across the category.

More Promises From Knowles and his Merry Men

In Q4 2018, Knowles assured shareholders that advertising would be up in 2019. I like the way they promise, then fail to deliver, and then extend a new promise.

Dennis R. Knowles – Lumber Liquidators Holdings, Inc. (source)

Second, with these with the major legacy legal issues behind us, we have the opportunity to increase our advertising spend this year

Of course, by now, with the stock price in the single digits, people have started to ask questions… One analyst seems surprised by the rapid drop in advertising:

Budd Bugatch

Okay and when I look at advertising, I think it’s down to 6.84 % reported for the year down, I think 60 basis points year-over-year. Historically, Lumber Liquidators has – advertising as high as high as 11% to 12% if I remember right going back a number of years, what the right level of advertising for this business now?

Dennis has reassuring words.

Dennis Knowles

This is Dennis, I would add a little color to that as well as that, as Charles has built out this digital team and our digital approach to marketing, we’ve had to make some investments in that team and pull back on advertising.

What Dennis effectively said is that he reduced advertise spending in order to increase payroll in the advertising department. Let that sink in. He is hiring employees in the digital advertising team, instead of simply advertising products. So payroll increases, advertising decreases and sales drop. That is the Knowles’ formula for success… leading to a single digit stock price. Note that Charles Tyson joined Lumber Liquidators in 2018 and is in charge of advertising. His compensation was $1.44 million. Maybe that money should have been simply spent on more advertising.

If the company was so desperate to expand the size of the “Digital Team,” why not just spend money to grow that team, and also spend money to increase advertising? Sure, that would increase costs at the company, but costs don’t actually seem to be a huge concern, as Adjusted SG&A has ballooned almost $20 million in the last 2 years anyway. And the advertising expense would have at least been offset by increased sales and net net profit dollars.

The issue here is poor planning and even worse execution by the CEO, Dennis Knowles. He has made decisions which have had direct, negative impacts on the business and his mismanagement is the leading cause of the company losing over 70% of its market value over the last 18 months, leading to huge losses for investors.

Let’s Change Management at LL and Finally Turn This Company Around

Join Our Proxy Fight to ReBuild LL

By |2019-06-10T21:02:55-04:00May 31st, 2019|Uncategorized|0 Comments

Dennis Knowles – The Tariff Blooper Reel

Lumber Liquidators imports approximately 45% of their products from China. Throughout 2018 there were rumblings about possible tariffs on these goods. Despite the huge impact that tariffs would have on the company and the clear risk that tariffs would be imposed, CEO Dennis Knowles did not mention the word tariffs a single time in Q1 or Q2 2018. This seems peculiar.

Martin Agard, the former CFO, had this to say about tariffs in Q2 2018.

Martin D. Agard – Lumber Liquidators Holdings, Inc. (Source)

“In my earlier comments about second half margins, assume no meaningful tariff adoption”

Here is an interaction with an analyst:

Gregory Scott Melich – MoffettNathanson LLC

Marty, I guess on the guidance, I heard that tariffs are not included and what’s your thinking for the back half? Could you remind us what percentage of your COGS are imported, anything that you have on what’s directly imported versus indirectly or China as a proportion of those?

Martin D. Agard – Lumber Liquidators Holdings, Inc.

Yeah. It’s in the 40% range that comes from China. But we have various appeals to those. And then a range of ways we would try to manage it. So, rather than speculate on what we’d include, what we wouldn’t, what would impact margin and so forth, we’re kind of sticking to the guide is kind of clean of that. And then we’ll sort of cross those bridges as we go.

The tag team of Knowles and Agard clearly didn’t think tariffs would be much of an issue.

But in Q3 2018, after tariffs were implemented (Sept 2018) Knowles faced a barrage of questions about tariffs. Mind you, this is also the time when the LL stock nose dived 50% in 3 months (July 15 to October 15 2018). Perhaps Knowles’ lack of planning and mismanagement of the tariffs issue had something to do with it?

What did Knowles have to say about tariffs then?

Dennis R. Knowles – Lumber Liquidators Holdings, Inc. (source)

We acknowledge that we’re faced with heightened macroeconomic conditions, namely increasing tariffs, which are impacting the cost side of our business. Roughly 45% of our merchandise comes from China and we’re subject to the 10% tariffs as of September 24. We’re aggressively and proactively exhausting all options to mitigate the cost increases.

While the effects of our strategy will not be seen overnight and tariffs remain a challenge, we’re considering any and all options to offset tariffs and improve our sourcing strategy.

Additionally, we’re laser-focused on our bottom-line and believe we can drive margin expansion through careful cost management and strategic mitigation of tariffs.

I think at this point, you kind of have to act like 25% tariffs going into place. And that impacts the aggressiveness of your sourcing changes as well as anything you might do to pre-buy.

So, all of a sudden, tariffs are being discussed, and they seem to be a major issue for the company. But Dennis Knowles assures everybody that he is being aggressive, proactive, strategic, exhaustive, and “laser-focused” (Dennis loves lasers) at mitigating these costs, by any means possible. He even says he is acting like 25% tariffs are going to happen.

Then what?

Five months later, in the Q4 2018 Conference Call, Martin Agard had this forecast to make on tariffs. (source)

Martin Agard

We anticipate 10% tariffs continuing, no removal and no escalation.

Martin Agard then resigned from the company.

Dennis Knowles, didn’t resign, but took the opportunity to reassert his resolve to mitigate tariffs:

Dennis Knowles

While the 25% of tariff has been indefinitely postponed, we know that our work to further mitigate the impact is still in front of us. To that end, we are not only improving our cost structure and supply chain, but also enhancing our capabilities under new leadership. We are actively renegotiating costs and moving product out of China where it makes sense.

Dennis also took a optimistic, yet cautious tone:

Dennis Knowles

We are currently assuming the trade environment with 10% tariff, though the potential of a 25% mark will have a substantial impact. 

Notice that this is a softer stance than his former remark “you kind of have to act like 25% tariffs going into place.”

In Q1 2019, tariffs remained a hot topic and Dennis Knowles gave us several insights on the company’s strategy and planning surrounding those major issues.

Dennis Knowles (source)

Our expectations for tariffs remain unchanged in the immediate turn and we remain focused on efforts to counter these impacts. As we mentioned last quarter, we expect incremental improvement in margins throughout the remainder of the year.

We have spoken about our core strategic priorities for 2019 that are focused on growing the business, enhancing the customer experience and, ultimately, driving margin expansion even in the face of tariffs.

Where does all this leave us?

As of May 10, 2019, tariffs on imported flooring products from China were increased from 10% to 25%. It caught the “management” team completely off guard. Knowles messed up again, and of course, it is at the shareholders expense. This virtually assures that margins at the company will fall in 2019. Unless something drastic changes, CEO Dennis Knowles will be proved completely wrong in his last quote.

I would also like to say that in my discussion with Lumber Liquidators IR, I can confirm that as of today, there has been no change in sourcing products from China. Despite everything that was said by Martin Agard, Dennis Knowles and even Charles Tyson, product sourcing from China has not changed. The new sourcing, away from China, will only start in Q3 2019 and it will only be a very small portion of the product mix. There will not be any significant sourcing change until 2020. Is it any wonder that the stock is now trading at under $10?

Sourcing Changes Take Time, But Management Changes are FAST! Let’s “source” a new Board and CEO.

Join Our Proxy Fight to ReBuild LL

By |2019-05-31T13:48:00-04:00May 30th, 2019|Uncategorized|5 Comments

Lumber Liquidators’ Branding Mess

Want to see a great example of sloppy branding? Look no further than Lumber Liquidators’ jumble of different sign designs.

No two Lumber Liquidators locations look alike.

Is this part of Management’s “strategy?” Is that a strategy to confuse consumers and devalue the brand? Because it seems to be having that exact effect.

LL shares are down to a lowly $9.70 today. Are you happy shareholders?

Sloppy Brand. Sloppy Management. Let’s Clean up this Sloppy Mess.

Join Our Proxy Fight to ReBuild LL

By |2019-05-31T09:45:12-04:00May 29th, 2019|Uncategorized|3 Comments

Performance vs Pay At LL – A Shareholder Heist!

I present the following information with very little commentary.

Performance Graph

The following graph compares the performance of our common stock during the period beginning December 31, 2013 through December 31, 2018, to that of the total return index for the NYSE Composite and a Custom Peer Group whose members are listed below assuming an investment of $100 on December 31, 2013.  In calculating total annual stockholder return, reinvestment of dividends, if any, is assumed.  The indices are included for comparative purpose only.  They do not necessarily reflect management’s opinion that such indices are an appropriate measure of the relative performance of our common stock. (Source:Lumber Liquidators Annual Report 10K)

(Source:Lumber Liquidators Annual Report 10K)

$100 invested in Lumber Liquidators in 2013 would now be worth…. $9.25. (And probably less today)

(Source:Lumber Liquidators Annual Report 10K)

Of note,

Cash is down, Total Assets are down,Stockholder Equity is down, Working capital is down.

Total Debt is up, Merchandise inventory is up, but the company added 60 new stores, so obviously it would be up. And the average sale is up, but below the rate of inflation.

Meanwhile…

🐷🐷🐷🐷🐷🐷🐷🐷🐷🐷🐷🐷🐷🐷🐷🐷🐷🐷🐷🐷🐷🐷🐷🐷🐷

Let’s Bring These Little Piggies to Market and Finally Turn This Company Around

Join Our Proxy Fight to ReBuild LL

By |2019-05-29T11:41:02-04:00May 29th, 2019|Uncategorized|0 Comments

LL Directors – Picked Up Some Free Shares!

With LL stock trading below $10 today, shareholders should all congratulate management and the directors for their stellar performance. After all, what better way to exemplify how great a job they are doing then by having the stock dive towards a yearly low.

The 52 week low is $8.81 per share. I’m sure as management continues to execute their “strategy” we should be seeing that price, and probably far lower in the near future.

But don’t worry. All is not lost. Because even though average shareholders are suffering, the board of directors have recently been able to pick up some delicious “free shares.”

Presenting The Winners of The 2019 Lumber Liquidators Stock Awards!

On May 24, 2019, each Director received 7,568 shares as part of their stock award for non-employee directors. A nice little windfall. All you home players should also note that last year, these same directors only received 2,863 because the LL stock price was higher. So, effectively, the lower the stock price goes, the more shares these guys get. Isn’t it just fabulous?

Note: Ms Nancy Taylor received 12,298 stock awards. She deserves more, since she’s leading this whole recovery.

Great work LL Directors!👏👏👏👏

And Directors,  just think about this, if you can get the stock to drop even more, then next year you can pick up even more shares!

Let’s Get These Clowns Out of Here and Finally Turn This Company Around

Join Our Proxy Fight to ReBuild LL

By |2019-05-28T16:05:26-04:00May 28th, 2019|Uncategorized|1 Comment