What’s happening with LL Flooring?
LL Flooring has been enduring a difficult spell.
According to Bloomberg, the company is weighing whether to file for Chapter 11 bankruptcy, due to falling sales and a bleak financial outlook. The company, which has over 400 stores across 47 U.S. states, has been hammered by consumer cutbacks on home renovations, per sources. As the New York Post writes:
“The flooring supplier’s net sales tumbled 21.7% this year to $188.5 million. Company shares have fallen 53.5% to 60 cents over the past week since Bloomberg first reported the potential shutdown.”
Now, a battle to oust the current leadership board is brewing. A dramatic news release (and a corresponding website) posted this week voices key concerns from company shareholders, including this excerpt:
“Yet rather than addressing the numerous critical issues facing the business head-on, LL Flooring’s Board continues to make poor and puzzling operational and financial decisions that are jeopardizing the future of the company. Consider the following:
- On June 28, 2024, the company disclosed that it believes it will not have sufficient liquidity to maintain compliance with its credit agreement as soon as this quarter.
- In a May 8, 2024 filing, LL Flooring disclosed a ‘going concern’ that its precarious financial condition raised substantial doubt regarding its ability to continue business operations for more than a year.
- The board is currently seeking to enter into a sale-leaseback commitment for its primary asset – LL Flooring’s Sandston, Virginia, distribution center – in a shortsighted and desperate effort to generate cash which will likely increase expenses and destroy value for shareholders in the long run.
- LL Flooring’s stock price continues to crater. The company’s stock has fallen 85.4% since the start of 2024, dropped 97.3% over the past three years, and plummeted a whopping 99.4% under the chair of the board Nancy Taylor’s ineffective leadership. The stock closed at $0.56 per share on July 5, 2024."
The writers of the release weren’t done assailing the board’s leadership. They write:
“The facts are clear: LL Flooring’s board of directors has presided over staggering value destruction for shareholders, significant operational losses, a sham sale process, and so-called strategic initiatives that have placed the company at immediate risk of going out of business.”
This is not the company’s first brush with difficulty. A 2015 “60 Minutes” investigation that revealed false claims about the company’s flooring products resulted in a $33 million securities fraud settlement. The company has since been struggling to rebound and rebrand.
In the meantime, the company’s founder, Tom Sullivan, seems keen to re-enter the fray. You can read his thoughts on how the company can make a comeback (much of which was voiced in the release linked above) here.
The most recent turn of events unfolded at LL Flooring’s July 10 annual stockholder meeting, which provides some insight on how the company plans to forge ahead. According to a press release, Sullivan, along with Jason Delves and Jill Witter, were elected to LL Flooring's board of directors. “We are deeply appreciative for the support our nominees received from LL Flooring’s shareholders. As newly elected directors, we are committed to getting to work immediately and in close collaboration with our new Board colleagues,” Sullivan said.
You can see the results of the most recent board vote here.
