Lumber Liquidators, Inc. (LL) Goldman Sachs 2012 Global Retailing Conference Call September 6, 2012 10:45 a.m. ET Executives Robert Lynch - President and Chief Executive Officer Daniel Terrell - Chief Financial Officer Analysts Matt Fassler - Goldman Sachs Presentation Matt Fassler - Goldman Sachs
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Dan Terrell has been with Lumber Liquidators since 2004, he has been the CFO for almost six years. Rob joined the company only in January of 2011, so nearly two years ago. He has been the CEO since January of this year. He came to this role from Orchard Supply Hardware where he was President and Chief Executive Officer, and prior to that among other places he worked at Home Depot and Wal-Mart. So with that I will turn it over to Rob.Robert Lynch Thanks, Matt. I hate to admit the Home Depot experience. Thank you very much and good morning everyone. We are excited and honored to be here with you this morning. And in terms of a little background, Lumber Liquidators is the largest specialty retailer of hardwood flooring in the United States. And our industry best value proposition of best price, best selection, best quality, best availability of product and best people is the key driver of our business and really differentiates us from all of our competitors. Additionally, recently our strong store model and our recent investments in infrastructure have allowed us to increase net sales and profitability as Matt mentioned, by increasing market share in a very highly fragmented, still highly fragmented wood flooring market. In 2012 we have focused on five key initiatives that the team is driving on growing revenue, continuing to improve our sourcing, optimizing our supply chain, driving traffic through increased advertising reach frequency and urgency, and developing the best people to serve our customers. We also are relentlessly committed to driving continuous improvement in all that we do and are working together as a team with a unified vision and strategy, and initiatives. And this goes from all of our store managers and every associate in our stores, all the way up to the senior team. So really with that, Matt, I would like to just turn it back to you for any questions.
Question-and-Answer SessionMatt Fassler - Goldman Sachs Great. We have a nice full room, I am sure we will have many from the audience. I am going to start with a question about your assortments. So you have historically been a hard wood flooring business, very focused mandate. You recently introduced some tools into the assortment. You are called Lumber Liquidators, you could sell many things presumably, if you chose to. How the tools look so far and how do you think about potential product extensions for the business? Robert Lynch Yeah, I think it’s very exciting. You mentioned some of the changes we made to the team. We brought a new chief merchant into the company last year, a couple of months after I joined Lumber, by the name of Bill Schlegel. And he has, in the last 12 months has significantly upgraded and turned over our merchant staff. We currently have -- you know I have been in retail a while. I started at Wal-Mart, I was at Home Depot. For a company of our size, we have probably one of the best high class merchant teams I have ever seen in my career. And they are really doing a phenomenal job. I am very proud of them. So, yeah, I think Matt that we have significant opportunity across all of our categories. In fact I have got a catalog in front of me. If I don’t mind sharing, we have some for everybody out there. We are introducing a new catalog right now with 51 new items. 51 new floors. So to your point about tools, Matt, now we are bringing in all the items that you need to complete your project tools, but we are also looking at -- and as we do our line reviews, we are looking strategically in terms of revenue generation. Is our assortment optimized? What can we expand within our core flooring categories? We have expanded to other flooring categories. We have added vinyl. In here we have added some new vinyl floors. We are expanding our laminate category. And then across accessories and moldings we are definitely looking there as well on [new mason] tools which, that’s been a very good test. It’s something that we started with 30 or 40 sale items a few months ago. Based on that performance it’s doing well and we are actually increasing it and we are going to up that probably 2x or 3x in terms of the tool assortment as we go forward. Read the rest of this transcript for free on seekingalpha.com