Speculation is rising that one of the wood industry’s most important retailers may be close to going into Chapter 11.
Following a precipitous drop in sales – down 21.7 percent this year – and with its share price tumbling more than 70 percent since the start of the year, the big retailer may be weighing a bankruptcy filing, according to a report from Bloomberg. As such it would have a big impact on the lumber industry which counts LL as one of its biggest retail customers.
Company officials declined to comment on the report but with its annual meeting just held this month all eyes are on its prospects.
At that meeting, held on July 10th, company founder Tom Sullivan and two of his supporters were elected to LL’s board of directors, amid back-and-forth charges from various investors. After being voted in, Sullivan said in a statement, “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.”
F9 Investments, which along with its affiliates says it is LL’s largest shareholder with about 8.85 percent of the company’s stock, put out a scathing release right before the meeting directed at fellow shareholders. “The situation at LL Flooring is dire, and time is running out for you to protect the value of your investment. 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.”
It cited a number of specific actions taken by the board, including a possible sale/leaseback of its main distribution center, which it called “shortsighted” and “desperate.”
“The facts are clear,” the F9 letter stated. “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.”
