Lumber Liquidators Offer Update on Supply Chain Optimization Initiative, Sees Expenditures $42-46M

Lumber Liquidators (NYSE: LL), thelargest specialty retailer of hardwood flooring in North America, todayannounced the next phase in its multi-year supply chain optimizationinitiative with the planned construction of a new distribution center inHenrico County, Virginia and the leasing of a new West Coast distributioncenter in Pomona, California. Lumber Liquidators has reached an agreement to purchase 110 acres ofundeveloped land within the White Oak Technology Park in Henrico County,Virginia and plans to construct a 1.0 million square foot distribution centerto consolidate and enhance its current East Coast operations.  The Companycurrently leases approximately 750,000 square feet of distribution spaceacross four separate buildings in Hampton, Virginia, whose leases generallyexpire prior to the end of 2014, and these locations would be consolidatedinto the new facility upon its completion.  The Company expects capitalexpenditures of approximately $42 million to $46 million, including land ofapproximately $5 million, to be incurred to construct the new facility, whichis expected to be completed in the third quarter of 2014.  Additionally, thenew facility will only require approximately $4 million in equipment, computerhardware and software.  The Company expects to fund all expenditures usingexisting cash and operating cash flow.  Upon full implementation of the newfacility, the Company expects that significant increases in operationalefficiency and unit flow, together with lower transportation and occupancycosts, will benefit operating margin and further strengthen the availabilityof product to its stores. Lumber Liquidators has also reached an agreement to lease an approximately500,000 square foot distribution center in Pomona, California.  The Companyexpects to begin operating that facility by November 2013, with fullimplementation planned for the first quarter of 2014.  The Southern Californiadistribution center will enable the Company to further strengthen theavailability of its entire industry-best product assortment, allowingcustomers shopping in its Western U.S. stores even greater flexibility in thetiming of their flooring projects.  The Company estimates costs associatedwith the opening of the facility of approximately $300,000 to $500,000 in thethird quarter of 2013 and approximately $1.0 million to $1.5 million in thefourth quarter of 2013.  Once in full operation, the Company expects apositive impact on operating income primarily from the combined benefits of astronger value proposition, substantial reduction in internationaltransportation costs and lower delivery costs.