LL Flooring, a major flooring supplier with 442 locations in 47 states, is facing financial troubles as it considers filing for bankruptcy. The company has experienced a decline in sales over the past year due to a decrease in home renovations across the country.
This downturn in spending has put the retailer in a tough position, potentially making it the latest to close stores amid economic challenges.
LL Flooring Faces Bankruptcy Concerns
According to Wood Floor Business, LL Flooring Holdings Inc., a well-known flooring retailer, is reportedly considering filing for Chapter 11 bankruptcy.
The company's stock plummeted to as low as $0.53 per share on July 5 following reports of the potential bankruptcy. Before this, shares were trading at around $1.40. As of the latest update, LL Flooring's shares were valued at $0.61.
Bloomberg reports indicated that the company might file for bankruptcy in the next few weeks as it struggles with high interest rates and decreased home renovation activities.
On July 1, LL Flooring announced its available cash might not meet the company's needs for the year's third quarter. The company is in talks with bank representatives involved in its credit agreement to secure additional funds and adjust some agreement terms.
LL Flooring is also trying to sell its distribution center in Sandston, Virginia, to improve its financial situation.
Just days before the bankruptcy speculation, LL Flooring's CEO, Tom Sullivan, expressed his concerns about the company's future.
He criticized the current leadership and described the company's sale process as ineffective, claiming that it is poorly managed and in desperate need of cash, putting it on the verge of quitting.
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Sullivan launched Lumber Liquidators in 1994 from the back of a pickup truck in Stoughton, Massachusetts, by selling surplus wood at discounted prices, as Daily Mail highlighted.
He soon began dealing directly with mills to offer competitive pricing. By its 20th anniversary in 2014, the company had served over two million customers and transformed hardwood flooring sales, emphasizing unmatched quality and value.
Sullivan left the company in 2017 and has since clashed with the board. The company rebranded as LL Flooring in 2020, is a significant player in the industry.
LL Flooring's Name Change Tied to "60 Minutes" Scandal
Lumber Liquidators, founded by Sullivan in 1994, rebranded to LL Flooring following a major controversy.
According to the New York Post, in 2015, a "60 Minutes" investigation revealed that much of the company's flooring sourced from China contained high levels of cancer-causing formaldehyde. This scandal prompted the name change as the company sought to move past the negative publicity and restore its reputation.
The California Air Resources Board (CARB) investigated after CBS reported high formaldehyde levels in nearly all tested samples from Lumber Liquidators. Violations could lead to fines of $1,000 per day for each defective product sold.
An environmental lawyer estimated that hundreds of thousands of households nationwide had installed the problematic flooring. The scandal and allegations of sourcing wood from protected Russian forests led to a 25% drop in Lumber Liquidators' stock.
The company denied the allegations but settled for $33 million in 2019.
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