Henrico-based LL Flooring weighs ‘strategic alternatives’ as suitors hover, stock price lags

LL Flooring headquarters Libbie Mill

LL Flooring’s headquarters at Libbie Mill Midtown. (BizSense file photos)

Citing multiple suitors and amid a struggling stock price, Henrico-based retailer LL Flooring is weighing its options for the future.

The publicly traded company, formerly known as Lumber Liquidators, disclosed earlier this month that it’s exploring “strategic alternatives,” which could include a potential sale, merger or other strategic transaction.

The move, according to a press release and SEC filing, is in response to “receipt of multiple inbound expressions of interest regarding a potential transaction with the Company.”

It also coincides with a continued downslide for the company stock, which trades on the New York Stock Exchange under the symbol “LL.” Its shares closed last week at $3.50 apiece, down 60 percent over the last 12 months and down 64 percent since the company went public in 2007.

Its share price peaked in 2013 at $119. Its market cap is currently $107 million.

The company declined to comment further about the strategic alternatives process beyond its release on Aug. 14.

The release quoted Nancy Taylor, chair of the company’s board of directors, who stated it had already been carrying out certain strategic work prior to the formal announcement but that outside interest led it down this path.

“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,” Taylor said. “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.”

LL Flooring sign

The company has more than 400 retail locations.

Among the suitors who have approached the firm in recent months was a group led by Thomas Sullivan, who founded Lumber Liquidators in New England in the mid-1990s before moving it to Virginia.

Sullivan, through his F9 Brands Inc., in late May offered to acquire all of LL Floorings outstanding shares for $5.76 per share and merge the company with one of this other retail brands, Cabinets To Go.

Sullivan launched Cabinets To Go around 2008, while he was still chairman of Lumber Liquidators.

The two companies over the years have sparred in at least two lawsuits, the most recent of which came in 2019 when LL Flooring sued Cabinets To Go for $10 million over competition of sales of wood flooring. The suit was eventually settled for undisclosed terms.

LL Flooring ultimately rejected Sullivan’s recent offer, saying in June it “significantly undervalued the worth of LL Flooring, its business and prospects.”

Sullivan then came back with a second offer, only to rescind it this month “in light of LL’s deteriorating financial and operational performance and eroding value,” and shortly after the company announced its strategic alternatives process, according to a Bloomberg report. The report said Sullivan’s F9 Investments owns 8.8 percent of LL Flooring stock.

Headquartered in a 53,000-square-foot office at Libbie Mill Midtown in Henrico, LL Flooring has more than 440 stores nationwide.

The company reported a loss of $39 million in the second quarter.

LL Flooring is represented in its strategic explorations by financial advisor J.P. Morgan Securities and law firm Skadden, Arps, Slate, Meagher & Flom.

It’s at least the second local publicly traded firm to go down the strategic alternative path in recent months.

Downtown-based Medalist Diversified REIT took the same approach in March, as its stock price was in the doldrums and it was under pressure from shareholders. In July, the company ousted its founding CEO and president, replacing them with one of its largest shareholders and set out to make other internal changes.