Mario Rizzi - Tel. 1-514-967-9827|info@RizziCapital.com

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Knowles Buys LL Stock!

A filing released this morning (August 12, 2019) shows that Lumber Liquidators CEO Dennis R. Knowles purchased 14,000 shares of LL stock at a price of approximately $8. The total value of this open market purchase is valued at about $112,000. To our knowledge this is the first time ever that CEO Knowles has made an open market purchase of the company’s stock.

We congratulate CEO Dennis Knowles for this LL stock purchase

The purchase of LL stock by the CEO on the open market is a tangible expression of his faith in the company. It sends a message to the market and to shareholders that the stock represents a good value (or is perhaps too cheaply priced). The fact that the CEO is willing to invest his own money into this company, is a good sign to shareholders.

My only small gripe is that the CEO might now have a lower average cost basis than me. Perhaps I will buy a bit more at this price too.

Mario Rizzi

514 967 9827

 

 

By |2019-08-12T09:09:08-04:00August 12th, 2019|Uncategorized|0 Comments

Merrill Lynch and Interactive Brokers Halt Margin Trading for Lumber Liquidators

Today, both Merrill Lynch and Interactive Brokers have indefinitely halted margin trading on Lumber Liquidators shares. Investors who own shares on margin must either fund their accounts to eliminate the margin or sell off their positions in order to cover their current margin account balances. Going forward, at these brokers, it will no longer be possible to purchase LL shares on margin.

Greed & Power

This is simply one more example of how Wall Street has lost faith in the company. The “leadership” of Lumber Liquidators, led by CEO Dennis Knowles and by Chairwoman Nancy M. Taylor insist on remaining in power at the company, and in doing so, are harming all shareholders and employees of Lumber Liquidators. The stock continues to drop and Knowles and Taylor are more concerned about their own jobs (paychecks) than the financial futures of thousands of shareholders and employees.

This is the personification and embodiment of greed. And at this point, with the stock trading in the $7 range, having fallen precipitously over the last years, months, weeks and days, the fact that nobody on the board or in senior management has been fired is a likely breach of the fiduciary duty and responsibility that all of these “leaders” have towards shareholders.

  • Dennis Knowles missed guidance.
  • Dennis Knowles lowered already rock bottom growth estimates which he provided just a month earlier.
  • Nancy Taylor has taken absolutely no action to address the failings of the management team.
  • Nancy Taylor continues to receive compensation which is the highest among the company’s self selected peer group.
  • Dennis Knowles will receive a record amount of compensation this year, including a record bonus award and an all time high amount of stock based compensation.

Stock Holders have seen their portfolios destroyed. Millions of dollars in losses.

I call on Dennis Knowles and Nancy M. Taylor to RESIGN their positions, so that a more competent team can operate the company.

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

Join Our Proxy Fight to ReBuild LL

By |2019-08-10T00:23:23-04:00August 9th, 2019|Uncategorized|0 Comments

Nancy, It’s Over.

Shares of Lumber Liquidators are in free fall. Sources within the company tell me that senior management is in disbelief.

CEO Dennis Knowles cannot comprehend why the stock price is falling.

Dennis Knowles

I don’t know Mr. Knowles. I have never met him or spoken to him, despite my best efforts to engage with him. But two things are clear from the stock drop today and over the course of the last weeks/months.

  1. Mr. Knowles does not possess the skills necessary to operate a public company like Lumber Liquidators.
  2. Mr. Knowles has lost the faith of shareholders and the investment community.

Mr. Knowles, you may be a great person. A great family man. And I am sure that you have many things to be grateful for in your life. But each day that you remain at this company, you do a disservice both to shareholders and to the whole team at LL.

Shareholders and LL employees have families and lives. You have been entrusted to steward investments, employments and reputations. For one reason or another, you have failed at this job. Now, you are injuring all of us financially each day that you remain with the company.

Mr. Knowles, it is time for you to resign your position as CEO of Lumber Liquidators.

Nancy M. Taylor

More than anybody at the company, Nancy M. Taylor must shoulder the blame both for the failings at the company and the collapsing stock price. As Chairwoman of the Board of Directors, you have been directly elected by the shareholders of this company to guide this company to profits and growth. It is your fiduciary duty to act only in the best interests of the corporation and its collective shareholders. You have failed in your duty.

A collapsing stock price in the face of abysmal company performance perfectly reflects the lack of faith that shareholders and investors have in your ability to guide this company.

Nancy M. Taylor, you recruited and employed Dennis Knowles. You watched over his actions and missteps over the years. You watched in silence as the stock price dropped. You have seemingly taken no direct actions to correct the course of this company or to address the failings of this management team.

It is very clear that as Chairwoman of Lumber Liquidators, you have been ineffective at your duties. Every day that you remain as Chairwoman of Lumber Liquidators, is one less day that we have to fix this company and one more day that we allow the competition to erode our market shares. You are causing irreparable damage to shareholders and the company.

Ms. Nancy M. Taylor, it is time for you to resign your position as Chairwoman of Lumber Liquidators.

Board of Directors

To members of the Board of Directors, your must perform your legal, fiduciary duty to shareholders and the company. Hard decisions must be made. But action must be taken before it is too late. Shareholders have suffered enough. It is time to remove both Dennis Knowles and Nancy M. Taylor from their positions, so that more competent individuals can be charged to turn this company around.

Mario Rizzi

514 967 9827

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

Join Our Proxy Fight to ReBuild LL

By |2019-08-07T18:48:16-04:00August 7th, 2019|Uncategorized|0 Comments

You Are Being Lied To

Last week, Floor and Decor announced their earnings. It was an across the board beat. Revenue, same store sales, profits and margins, all came in strong. Stronger than almost any body expected. The stock soared 20% higher.

Today, Lumber Liquidators reported “earnings.” It was an across the board failure. Revenue, same store sales, profits (losses) and margins, all came in weak. The stock slumped, 20%.

Floor and Decor, said that there were almost no macroeconomic headwinds. The mentioned how they were cautiously optimistic about lower interest rates fueling a housing rebound. As for tariffs, FND said “by the end of 2019, we expect the percentage of our merchandise sourced from China to decline to the mid-30% range from 50% in 2018. We believe it will continue to decline in 2020 and beyond.”

By contrast, Lumber Liquidators blamed all of their poor performance on macroeconomic events. They said slow sales were due to uncertainty about interest rates and they cut revenue guidance for the back half of the year, due to the economy. As I have mentioned many times, LL has been very slow to migrate imports away from China. Historically, LL has imported about 47% of their product from China. Today, the company forecast that by the end of 2019, it would reduce Chinese imports to the mid 40% range. So, basically, they will maybe reduce Chinese imports by 2 or 3%. That is pathetic execution, compared to FND which will reduce Chinese imports by 15%.

Both FND and LL operate in the same industry and both are subject to the exact same macroeconomic risks. LL is doing a terrible job of navigating those risks. FND is executing flawlessly. LL stock is plunging, now trading at $7 per share. FND stock is soaring, now trading at over $43.

Make no mistake, Dennis Knowles, Charles E. Tyson and Nancy M. Taylor are the root cause of LL’s problems. It’s not the economy or tariffs. It’s terrible management. LL management is lying to investors by blaming the poor economy. And as the stock price plunges, investors are suffering massive losses. 

Enough is Enough

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

Join Our Proxy Fight to ReBuild LL

By |2019-08-07T11:23:51-04:00August 7th, 2019|Uncategorized|0 Comments

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 |2019-08-06T19:32:49-04:00August 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 |2019-08-06T13:36:27-04:00August 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 |2019-08-05T12:00:01-04:00August 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 |2019-08-04T16:21:58-04:00August 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 |2019-07-25T18:13:25-04:00July 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 |2019-07-22T22:14:40-04:00July 22nd, 2019|Uncategorized|0 Comments