LL Flooring, one of the largest flooring suppliers in the United States, is considering Chapter 11 bankruptcy amid financial troubles.
Amid declining sales and financial struggles in the retail sector, LL Flooring is seeking new capital and other measures to boost cash reserves.
According to Daily Mail, the company, which operates 442 stores in 47 states, has been experiencing a significant drop in sales over the past year. Americans have reduced spending on home renovation, contributing to the company’s financial woes.
Founded by Tom Sullivan in 1994 as Lumber Liquidator, LL Flooring started from humble beginnings. Sullivan initially operated out of a pickup truck in Stoughton, Massachusetts, negotiating directly with mills to offer lower prices by cutting out wholesalers.
By 2014, the company had served over two million customers and significantly impacted the hardwood flooring market. "To look back and see how far we've come in 20 years is almost like a dream," Sullivan remarked in 2014. In 2020, the company rebranded from Lumber Liquidators to LL Flooring, a move that marked a new chapter in its history.
According to Bloomberg, LL Flooring is contemplating filing for Chapter 11 bankruptcy protection to reorganize and shield itself from creditors. The news, reported on July 3, 2024, has caused shares of LL Flooring to plummet by 31 percent.
The company is actively seeking fresh capital, with its adviser, Houlihan Lokey, in talks with potential investors. Additionally, LL Flooring is attempting to sell a distribution center in Virginia to bolster its cash reserves.
The broader retail sector is facing higher operational costs, particularly labor expenses, in the post-pandemic era, contributing to the financial strain on businesses like LL Flooring.
LL Flooring is not alone in its struggles. In 2024, the retail industry has seen nearly 2,600 store closures. Major chains like Walmart have closed underperforming locations, with Walmart shutting down three stores and Rite Aid closing 27 pharmacies.
99 Cents Only announced in April 2024 that it would close all 371 of its stores across California, Texas, Arizona, and Nevada. Furthermore, Family Dollar and Dollar Tree plan to permanently close 1,000 stores over the next few years.
LL Flooring's potential Chapter 11 bankruptcy filing aims to address financial challenges and allow the company to reorganize its business strategy while continuing operations.
Selling the Virginia distribution center is part of efforts to improve liquidity, alongside exploring other avenues for securing capital. Despite current financial hurdles, Tom Sullivan’s vision of providing quality flooring at affordable prices remains central to the company's mission.
LL Flooring's consideration of Chapter 11 bankruptcy reflects financial struggles in the retail sector, with declining sales and rising operational costs. Founded in 1994, the company faces challenges similar to major chains like Walmart and Rite Aid, which are also closing locations. LL Flooring is exploring strategic measures, including selling a distribution center and seeking new capital, to address its financial issues and adapt to the changing economic environment.
