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A Look Back at Past “Earnings Report” Dates

How Did LL Stock Perform on The Days of The Last 14 Earnings Reports?

Feb 29, 2016 – Up 2%

May 10, 2016 – Down 8%. Down an additional 7% the next day.

Jul 27, 2016 – Down 4%. Rebounded back over the next week.

Oct 31, 2016 – Down 15%

Feb 21, 2017 – Up 19%

May 2, 2017 – Down 14%

Aug 1, 2017 – Up 36%

Oct 31, 2017 – Down 11.5%

Feb 27, 2018 – Down 9%

May 1, 2018 – Down 17.5%

Jul 31, 2018 – Down 21%

Oct 30, 2018 – Down 7%

Mar 18, 2019 – Down 3.5%

Apr 30, 2019 – Up 1%

August 7, 2019 – ???????

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

Join Our Proxy Fight to ReBuild LL

By |2019-08-06T19:32:49-05:00August 6th, 2019|Uncategorized|0 Comments

Memory Lane and Some Simple Math.

On April 1, 2014, Nancy M. Taylor joined the Board of Lumber Liquidators. The stock was at $94.53. Today, the stock is at $8. It has lost 91.5%.

On November 4, 2014, Nancy M. Taylor became Chairwoman of Lumber Liquidators. The stock was at $15.31. Today, the stock is at $8. It has lost 47%.

On March 1, 2016, Dennis R. Knowles joined Lumber Liquidators as Chief Operating Officer. The stock was at $11.99. Today, the stock is at $8. It has lost 33%.

On November 9, 2016, Dennis Knowles was appointed CEO of Lumber Liquidators. Ms. Nancy M. Taylor said, “We are thrilled to have someone with Dennis’ deep and extensive retail experience to lead the Company.” The stock was at $15.10. Today, the stock is at $8. It has lost 46%.

Any questions?

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

Join Our Proxy Fight to ReBuild LL

By |2019-08-06T13:36:27-05:00August 6th, 2019|Uncategorized|0 Comments

A Banana, for Scale

Lumber Liquidators share price performance versus JC Penny, over the last 2 years.

Lumber Liquidators share price performance versus Sears, since the start of 2019. (Keep in mind, Sears filed for bankruptcy in October 2018)

Maybe it’s time for a change at LL?

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

Join Our Proxy Fight to ReBuild LL

By |2019-08-05T12:00:01-05:00August 5th, 2019|Uncategorized|0 Comments

Change is Needed. Action is Needed.

  • Lumber Liquidators’ share price dropped to $7.86 this week. The S&P is just points away from an all time high while LL shares are trading near an all time low.
  • LL shareholders are frustrated and angry, and rightfully so. Management at LL has remained completely silent as the stock has fallen 35% in the last 12 trading days. No press release, no public appearance. Nothing.
  • The Board of Directors has taken absolutely no action in the last 2 years to stop the deterioration in the business. LL sales and margins are dropping and customers are flocking to Floor and Decor, a competitors which had less than 70 stores just 3 years ago and which is now on track to have revenue almost twice the size of LL by the end of the year.
  • The Board of Directors has taken absolutely no action in the last 2 years to raise the tumbling stock price which was at $42 in September 2017, but has fallen 80% since then, and now sits at $8.68, below the company IPO price in 2007
  • Lumber Liquidators does not even have a CFO, after Martin Agard unceremoniously resigned 4 months ago.
  • On June 19, 2019, the Lumber Liquidators Value Committee (LLVC) nominated industry expert David Hartman as an independent candidate for appointment to the Board of Directors of Lumber Liquidators. The Board, led by Nancy Taylor, still has not responded to our nomination.

As time passes, the stock price continues to drop. Shareholders continue to suffer. The company continues to perform poorly. Management and the board continue to receive their abundant salaries and to award themselves ever increasing amounts of free stock options and reserved shares.

The current price of $8.68 per share perfectly reflects the stock market’s faith and trust in the leadership of this company. The market is not buying management’s or the board’s bullshit anymore. The market is selling the stock, hand over fist, each and every day. The only thing getting liquidated at LL is the stock price, and shareholder portfolios.

Those are the facts.

Let’s Fix This MESS and Finally Turn This Company Around, Before It’s Too Late.

Join Our Proxy Fight to ReBuild LL

By |2019-08-04T16:21:58-05:00August 4th, 2019|Uncategorized|0 Comments

On This Day In History – LL Shares Have Never Been Lower

July 25, 2019 – LL Shares close at $9.93

July 25, 2018 – LL Shares close at $24.95

July 25, 2017 – LL Shares close at $25.41

July 25, 2016 – LL Shares close at $16.90

July 25, 2015 – LL Shares close at $19.22

July 25, 2014 – LL Shares close at $55.22

July 25, 2013 – LL Shares close at $86.61

July 25, 2012 – LL Shares close at $41.31

July 25, 2011 – LL Shares close at $17.08

July 25, 2010 – LL Shares close at $23.24

July 25, 2009 – LL Shares close at $17.00

July 25, 2008 – LL Shares close at $14.48

You can’t argue with that…

Let’s Fix This Broken Company, Before The Stock Drops Even More.

Join Our Proxy Fight to ReBuild LL

By |2019-07-25T18:13:25-05:00July 25th, 2019|Uncategorized|0 Comments

LL Shares drop ~ 20% in 3 days as Company Remains Silent

A recap for all LL shareholders.

Lumber Liquidators actually has 2 Investor Relations teams. This is not a normal occurrence. But the company feels that in order to properly “connect” with shareholders, they need an “in-house” team and an external IR group.

  • In-house team, led by the new VP of IR and FP&A, Mr, Paul Taaffe. Oddly, Paul has not even updated his LinkedIn page to reflect his new employment with LL. (https://www.linkedin.com/in/paultaaffe1/)
  • External IR, led by Danielle O’Brien, from Edelman

With such talent at the helm of the double IR department, we have a couple of questions.

Why has LL been completely silent as the stock drops to a near 52 week low, losing almost 20% in the last few trading days?

What are we paying these 2 IR teams to do?

Investors have double the reason to be enraged.

The Train Wreck Continues

This last week, many investors have remarked that the stock has been plummeting for no reason. Is that really the truth? Let’s recap some “reasons” for the stock drop.

Lumber Liquidators also still does not have a full time CFO. After Martin Agard jumped ship in March 2019, the company still has not been able to find a replacement. Maybe a company without a CFO should be trading near a 52 week low… I know I would not invest in a company that did not even have a CFO.

Lumber Liquidators management still has not purchased any LL stock in the open market. We demanded that executives purchase stock months ago (http://rebuildll.rizzicapital.com/2019/06/03/llvc-demands-that-ll-executives-and-board-purchase-shares-in-open-market/) But other than a paltry purchase by Charles Tyson, no other executive has followed. Lumber Liquidators IR has told me that they want to host an Investor/Analyst Day later this year, to really tell the investing community why they should be excited about LL. A question which begs asking is, “why should investors be excited about owning LL stock, if management isn’t even excited enough to buy it themselves?”

On June 19, 2019, LLVC officially nominated industry expert David Hartman to join the LL Board of Directors. There is still no update from the LL board concerning this nomination. In fact, last we heard, LL Investor Relations was still busy vetting the LLVC membership, rather than actually vetting David Hartman. Instead of seeing the merit of having a flooring industry expert on the board, the board has chosen to stall and to investigate LLVC members. Doesn’t the board have a fiduciary duty to act in the best interest of the company?

The Lumber Liquidators Board of Directors is listed here: http://investors.lumberliquidators.com/management-and-directors?cat=1

Not a single member of the board, other than the CEO, Dennis Knowles, has any experience in flooring. Not a single one of the directors has ever worked in a hardware or flooring store, or has any experience in retailing of building materials. How can a company like Lumber Liquidators claim to be a leader in the flooring industry, when not a single person on the board has any knowledge of the flooring industry? Not only that, but the Chairwoman of LL, Nancy M. Taylor, is also paid the highest compensation of ANY chairperson or lead director in LL’s self-selected peer group. http://rebuildll.rizzicapital.com/2019/04/20/lumber-liquidators-overpaying-for-under-performance/

We pay these people tons of money, and not only do we not see any results, but these directors also have no relevant experience.

Other fun facts about LL

The board recently diluted the share count by 1.75 million shares in order to pay out more stock options and reserved shares to management. http://rebuildll.rizzicapital.com/2019/04/25/investor-group-recommends-lumber-liquidators-shareholders-reject-proposals-to-increase-executive-pay-and-dilute-shares/

The board doubled the executive Bonus payout rate for the lowest level of performance (threshold level), thereby further rewarding and incentivizing mediocre performance. Meaning that even though LL is having a terrible year and forecasting growth and margins to fall, executives will likely earn an even higher bonus than last year for their “performance. ” http://rebuildll.rizzicapital.com/2019/04/25/investor-group-recommends-lumber-liquidators-shareholders-reject-proposals-to-increase-executive-pay-and-dilute-shares/

The Board of Directors at Lumber Liquidators was able to pass these ridiculous proposals because they hired a proxy advisory firm in an effort to contact and influence shareholders. The Board effectively used company money to help pass proposals which harm shareholders. 

The CEO of Lumber Liquidators has been slashing advertising spending for the last few years. This coincides perfectly with falling growth at the company. Is this a coincidence? Can you really cut your way to growth and profitability? Judging by the results for the last 3 years, the answer is clearly NO. Just another one of many mistakes. http://rebuildll.rizzicapital.com/2019/05/31/dennis-knowles-slashing-advertising-and-stalled-sales/

CEO, Dennis Knowles and most of the executive management team at LL recently met with Whitney Tilson, the short seller who not only publicized the Chinese laminate story which sunk LL stock 90%, but who also profited by shorting the shares (betting that they would fall).  Why did the management team meet with this unsavory individual, at LL headquarters, for almost 2 hours? Note also that LLVC members owns 4.5% of LL shares, yet, neither Dennis Knowles nor the board will engage with us, either by phone or in person. Whitney Tilson, on the other hand, owns exactly ZERO shares and gets the red carpet treatment. http://rebuildll.rizzicapital.com/2019/05/31/knowles-meets-with-tilson-shareholders-should-be-enraged/

Tariffs ?

The company will soon announce “earnings” and management will likely be quick to point the finger at tariffs, as the main excuse for their under-performance. That’s a very convenient and easy scapegoat. As we have seen (look above), 90% of the problems at the company are company-specific and have been create by and continue to be perpetuated by the board and management.

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

Join Our Proxy Fight to ReBuild LL

By |2019-07-22T22:14:40-05:00July 22nd, 2019|Uncategorized|0 Comments

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 |2019-07-02T11:13:35-05:00July 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 |2019-06-21T09:38:35-05:00June 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 |2019-06-03T10:23:10-05:00June 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 |2019-06-03T10:25:24-05:00June 3rd, 2019|Uncategorized|0 Comments