LL Flooring weighing its options, including a sale
Less than two months removed from rejecting an acquisition proposal from Cabinets to Go, LL Flooring’s Board of Directors made a point of saying it is open to offers.
About an hour after the close of the market on Aug. 14, LL Flooring issued a statement saying the flooring retailer is exploring "strategic alternatives" to maximize shareholder value.
As part of this process, the board will consider a wide range of options for the company including a potential sale, merger, or other strategic transaction, LL Flooring said.
“The LL Flooring Board of Directors has confidence in the company’s strategy and believes that the strategic work the management team has been doing to strengthen the business will provide long-term benefits,” said Nancy Taylor, independent chairperson of the board of directors. “While this work is well underway, in light of external interest in the company, the board, and management are taking the opportunity to explore a range of potential strategic alternatives to maximize shareholder value. We look forward to working diligently with our external advisors to identify the best path for the future of LL Flooring and all of our shareholders.”
The Richmond, Virginia-based retailer’s announcement follows a dismal second quarter financial performance including net sales falling 21% to $236.4 million as comp store sales decreased 22.2% during the period. LL Flooring also reported the closing of one store in the second quarter.
Net sales for the first half of 2023 have dropped 17% to $477.1 million.
LL Flooring also posted a net loss of $39 million for the second quarter compared to a net income of $2.7 million for the same period a year ago. The company posted a $10.6 million net loss in the first quarter of this year.
President and CEO Charles Tyson has said that LL Flooring's financials have been impacted by consumers pulling back from big-ticket discretionary spending along with a significant slowdown in remodeling projects.
In late June, the retailer's board unanimously rejected an unsolicited, non-binding proposal from Cabinets To Go, LLC.
Cabinets To Go, a subsidiary of F9 Brands, Inc., had proposed acquiring all of LL Flooring’s outstanding shares for $5.76 per share in cash. LL Flooring acknowledged receipt of the unsolicited proposal on May 30.
Share prices of LL Flooring closed at $3.75 on Aug. 14 but moved ahead more than 14% at pre-market to $4.30.
LL Flooring now says it is “open to considering a transaction that appropriately reflects the Company’s value and prospects.” As of June 30, LL Flooring operated 442 stores.
“There can be no assurance that the Company’s strategic alternatives process will result in LL Flooring pursuing any particular transaction or other strategic outcome,” the company said.
LL Flooring is the former Lumber Liquidators.
