BUYING TIME: Bankrupt LL Flooring gets last minute rescue with new owner – but 200 stores are still set to close for good

According to THE SUN, Home improvement chain LL Flooring is making a surprising turn after initially announcing it would close all its stores. The bankrupt retailer has secured a new buyer but will still be shuttering hundreds of locations.

Bankruptcy and New Ownership

Previously known as Lumber Liquidators, LL Flooring filed for Chapter 11 bankruptcy in August as it worked to negotiate potential sales. On September 4, the company declared that it could not secure an offer and planned to close its remaining locations. However, a last-minute agreement with private equity firm F9 Investments has now changed the trajectory of the company.

Under this new agreement, LL Flooring will sell 219 of its stores, along with a distribution center in Virginia, its intellectual property, and other assets to F9 Investments. The deal is expected to close by the end of September.

LL Flooring’s president and CEO, Charles Tyson, expressed optimism about the new arrangement, stating, “We are pleased to have reached this agreement with F9 Investments for a going-concern sale following significant efforts by our team and advisors to preserve the business and maintain ongoing operations.” He emphasized the company’s commitment to serving customers and collaborating with vendors as they navigate the court-supervised process toward finalizing the transaction.

Ongoing Store Closures

Despite securing a buyer, LL Flooring will still close 211 of its locations. Out of these, 117 stores had already initiated closures, while 94 were in the process of shutting down at the time of the bankruptcy filing.

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A Return to Basics

F9 Investments is led by Tom Sullivan, the founder of Lumber Liquidators, who plans to rebrand the purchased locations under the original name. Sullivan shared his vision for the revived brand, saying, “We’ll be getting back to basics. Basically, yellow and black is coming back … We know what worked before.” He stressed the importance of knowledgeable staff in stores who can provide customers with great deals.

As part of its turnaround strategy, LL Flooring will streamline its product offerings, eliminating repetitive or low-selling options. Sullivan noted that significant sales on existing inventory will likely occur during the transition. Additionally, the company aims to enhance shipping efficiency by collaborating with Cabinets To Go, another brand owned by F9 Investments.

Challenges and Controversies

LL Flooring’s journey has not been without challenges. Founded about 30 years ago in Massachusetts, the company became a major vendor of hardwood flooring in North America. However, it faced a significant setback following a 2015 “60 Minutes” segment that exposed the use of laminate flooring containing dangerously high levels of formaldehyde from its suppliers. In 2018, LL Flooring agreed to pay $36 million to settle class action lawsuits related to the issue.

“We’ll be getting back to basics. Basically, yellow and black is coming back … We know what worked before. It’s not fancy offices in Richmond with 200 people that didn’t know the flooring business. It’s great people in our stores that know flooring [and] customers that want a great deal and know Lumber Liquidators is the place to go.”

In 2021, the company rebranded from Lumber Liquidators to LL Flooring in response to the controversy, yet it has continued to struggle with profitability. A recent earnings report revealed an 18.5% drop in net sales for 2023, attributed to declining foot traffic and demand for its products. The company reported over $416 million in debt against assets of just over $501 million as of July 31.

The pandemic’s impact on consumer spending on non-essentials has also influenced LL Flooring’s struggles, paralleling the challenges faced by other retailers. Conn’s HomePlus has filed for bankruptcy and is closing all its locations, while Big Lots has recently announced plans to close 545 stores after its own bankruptcy filing. As LL Flooring embarks on this new chapter, the landscape of home improvement retail continues to evolve amid ongoing challenges.