The industry was taken somewhat by surprise when Tom Sullivan, the embattled founder of LL Flooring (formerly Lumber Liquidators) swooped in at the 11th hour to reacquire the company and revert to the original name after the several failed attempts at a takeover. As Lumber Liquidators moves into a new chapter, it raises questions as to whether he will help the company overcome a checkered past and compete in a crowded retail landscape.
The company owned by Sullivan, F9 Investments, acquired 219 stores and their inventory, a distribution center in Sandston, Va., plus LL Flooring’s intellectual property and other assets last September. When the Richmond, Va.-based retailer filed for Chapter 11 bankruptcy protection last August, it reported operating 442 stores nationwide and planned to go out of business after 30 years. Sullivan gave the retailer synonymous with hardwood flooring a second life, although the remaining 211 stores were set to close.
“I think Tom Sullivan will turn that around and go back to what made them a formidable player, now that they don’t have to kowtow to Wall Street,” Olga Robertson, president, FCA Network, told FCNews. “They’ll have the same challenges any retail business has today—getting customers in the door, getting quality installers and hiring good people in every department.”
Miami-based F9 Investments, a private equity firm, purchased a company whose stock price cratered since the start of 2024, as the retail chain faced critical issues that jeopardized its future. The stock price plummeted 97.3% over the prior three years, falling to $0.56 per share on July 5. “I thought changing away from the name and going to LL was a good idea, but clearly what they were doing was not working,” observed Erik Warren, president of residential for America’s Floor Source, Columbus, Ohio. “Even though there are negative connotations with the brand, it was a very recognizable name.”
Warren views the comeback as more of a reset than a rebrand. “It’s kind of like when they changed the recipe for Coca-Cola and then changed it back,” he explained. “If you are going to find a niche, inexpensive hard surface is a pretty solid bet, especially if the next several years are strong economically.”
The difference this time around, according to Sullivan, is management of the new Lumber Liquidators will be localized and concentrated. “It’s not fancy offices in Richmond with 200 people that didn’t know the flooring business,” he stated in a release. “It’s great people in our stores who know flooring and customers who want a great deal and know Lumber Liquidators is the place to go.”
A major challenge facing the new Lumber Liquidators is whether it can expel the ghosts of its past. While the bankruptcy filing was national news, LL came under fire following a 2015 “60 Minutes” investigation, which concluded laminate flooring the company imported from China contained hazardous levels of formaldehyde, a known carcinogen. Later that year, LL pleaded guilty in federal court to illegal importation of hardwood flooring and was hit with $13 million-plus in penalties in 2016.
In a move to win the public relations battle, the company took on a new identity and changed the name to LL Flooring in 2020. In retrospect, some say that was a mistake. “They should never have changed the name to LL Flooring,” FCA’s Robertson said. “I’m sure they thought the formaldehyde debacle would be an albatross, but consumers have a very short attention span and quickly forget.”
As LL aims to reposition itself as a leading flooring retailer, whether it can regain consumer confidence remains to be seen. Industry members contacted by FCNews offered mixed opinions on the effectiveness of the rebranding.
“It’s always a challenge to close up doors, for whatever reason, and reopen—or try to rebrand to be in the game again,” noted Erik Kadlec, owner, Walgenmeyer’s Carpet & Tile, Madison, Wis. “Sullivan has done it before and knows what he’s doing, so I would guess he’ll do it again.”
Scott Rozmus, president and CEO of top-20 distributor FlorStar Sales, said the Lumber Liquidators brand has a lot of recognition in the marketplace, “some not so good, but some pretty good. On balance, that strategy probably makes the most sense for them.”
Others are not so sure. “I think it’s a mistake to go back to the brand that lost consumer confidence,” said Paul Deschenes, general manager, Schneider’s Flooring America. “I’m not sure how restoring the original brand will bring back that lost consumer [base].”
Matt Vann, owner, Vann Carpet One Floor and Home, Lake City, Fla., said changing the name back may help some, but added: “If customers Google ‘Lumber Liquidators,’ there is a lot of negative information online about them.”
While the strategic direction of the company was not revealed to FCNews at press time, Sullivan did outline some first orders of business. “We’ll be getting back to basics,” the release stated. “Basically, ‘yellow and black’ is coming back. We know what worked before.”
Sullivan further explained the retailer plans to adopt a more “manageable” selection of flooring options and get rid of material that feels duplicative or does not sell well. So customers will likely see big discounts on much of the inventory left behind from LL Flooring’s bankruptcy process.
An evolving retail landscape
The former LL grew rapidly from one small store in Boston to one of the largest specialty flooring retailers by providing a wide variety of flooring at competitive prices. Clearance sales and promotions helped attract price-conscious customers looking for affordable floor coverings. Under the LL Flooring banner, the retailer offered an assortment of hard surfaces and a range of flooring enhancements and accessories. It provided in-home delivery and installation services to its customers.
“The old LL business model isn’t necessarily going to work in today’s environment,” Schneider’s Deschenes said. “The race to the pricing bottom with cheap product offerings is not a sustainable business model.”
When you are selling basically a commodity product, you need to look for other ways to differentiate yourself in the consumer’s eyes, retailers say. “The Internet has made everyone an expert, and consumers are getting more and more leery of everything,” said Stephanie Landers, owner, Landers Premier Flooring, Austin, Texas.
Some retailers say LL’s success hinges on adopting the right identity for the times. LL Flooring primarily sold to consumers and flooring-focused pros, such as installers, remodelers and small- to medium-sized home builders on behalf of consumers through a network of store locations in metropolitan areas. “I think they have to decide if they want to be considered a discount flooring retailer or go after middle to higher-end customers,” Carpet One Floor & Home’s Vann stated.
While the rebranding signifies a hopeful new beginning, the road ahead for LL is fraught with challenges. One of the biggest is the retail landscape, which has changed considerably since LL’s days of being a formidable competitor to Home Depot’s flooring business. “I think their customer base has moved on to other big box flooring stores and it will be hard for them to reclaim that customer,” Vann added.
The expansion of alternative retail formats—such as shop-at-home services and online sellers—coupled with growing footprints of national and regional home centers, retail groups, furniture stores and store chains provide consumers with more choices to shop today. “If Lumber Liquidators tries to pursue an all-categories approach, they likely will face significant headwinds from these competitors,” FlorStar’s Rozmus predicted. “On the other hand, sticking more to their original, core focus of value-oriented hardwood flooring might allow them to differentiate among the box-store competitors and make a go of it.”
Savvy consumers are researching flooring choices online, which positions a retailer’s value proposition, customer service and shopping environment as difference makers in winning their business. “It’s difficult for any retailer, new or old, to carve a niche and succeed in today’s environment,” said Eric Langan, president and owner, Carpetland USA, which runs multiple Midwest locations. “The organizations that do and will succeed have excellent team members, a clear vision, high standards and a determination to never settle for mediocrity.”
Only time will tell if LL’s rebranding will be enough to win back customers and restore its standing in the market. “In Austin, being locally owned is important to our customer base, so larger national companies such as Lumber Liquidators and Home Depot need to overcome that barrier to be successful,” Landers stated.
Mitch Rosen, founder and CEO of LLGC (Lumber Liquidators General Contracting) completed over 350 new showrooms throughout the United States for Lumber Liquidators. He worked closely with Sullivan, whom he said was driven by a shared commitment to open stores quickly and cost effectively.
“Through Tom’s leadership, the culture of our company and that of Lumber Liquidators radiated excitement and established loyalty and teamwork,” he recalled. “Unfortunately, in recent years, new management shifted away from those core values and rebranded Lumber Liquidators to LL Flooring. With the name change, brand recognition plummeted and ultimately forced the company into bankruptcy. But thanks to the hard work and efforts of Tom Sullivan, Jason Delves, Avi Cohen, Jill Witter and many others at F9 Investments, Tom successfully reacquired the company out of bankruptcy and has restored to the original Lumber Liquidators name.”
For this next phase of the company’s history, Rosen announced that the Installed Right division of LLGC has been granted exclusive rights to handle all flooring installation for Lumber Liquidators. And all that is music to Rosen’s ears. “I am honored by this opportunity and look forward to contributing to Lumber Liquidators’ revival,” he said. “Sometimes, revisiting our past can ignite a great journey forward to a brighter future.”
America’s Floor Source’s Warren was similarly upbeat, offering this assessment: “People have short memories. I would not be surprised to see the relaunch be very successful.”
The post Lumber Liquidators: Part 2 appeared first on Floor Covering News.