UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
(Amendment No. )
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| ☐ | Preliminary Proxy Statement |
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| ☐ | Definitive Proxy Statement |
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| ☐ | Soliciting Material under Rule 14a-12 |
LL Flooring Holdings, Inc.
(Name of registrant as specified in its charter)
(Name of person(s) filing proxy statement, if other than the registrant): N/A
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Dear Fellow Shareholders, at our upcoming 2024 Annual Meeting of Stockholders on July 10, 2024, you will be asked to make an important decision regarding the future of LL Flooring. Thomas Sullivan, founder of the Company, is attempting to take control of LL Flooring through a costly and distracting proxy contest to install himself and two of his hand-picked employees on your Board of Directors. Given Mr. Sullivan’s actions during the Company’s strategic review process, we believe he may be attempting to force a sale of the Company to himself at a price that may undervalue the Company. In addition to Mr. Sullivan and his nominees, Jerald Hammann, another individual shareholder of LL Flooring, has nominated himself to the Board. Mr. Hammann has a history of nominating himself to corporate boards when owning only a few shares of stock. Indeed, Mr. Hammann only owns 10 shares of LL Flooring stock and fundamentally lacks a cogent plan for LL Flooring along with any distinct skills or experience. As you consider your vote, we would like to highlight the following: • Mr. Sullivan’s proxy contest is self-serving, personal and not in the best interests of all shareholders and Mr. Hammann is not qualified to serve on the Company’s Board. • Your Board and management team have determined a set of five strategic priorities and are taking decisive action to deliver on those priorities to drive value creation. • Your Board is also taking action to address near-term financing needs. • Through its previously announced strategic alternatives review process, your Board has been carefully and thoroughly evaluating and engaging with third parties regarding indications of interest and non-binding proposals to acquire the Company. • LL Flooring has a highly qualified and engaged Board with the right mix of skills and expertise to oversee the Company’s execution of its strategic priorities and the Company’s overall strategic direction. We urge you to support your Board by voting the universal WHITE proxy card today “FOR” ONLY LL Flooring’s three highly qualified director nominees – Douglas T. Moore, Ashish Parmar and Nancy M. Taylor.
Executing Our Strategic Plan for Growth and Value Creation LL Flooring’s strategy, as crafted by management under the oversight of the Board, is the result of a thorough analysis of LL Flooring’s business, competitive positioning in the marketplace and current operational environment. The broader home improvement industry continues to face numerous headwinds driven by weaker home sales and compounded by elevated interest rates and inflation. These structural factors have led to softness in home improvement, remodel and big-ticket discretionary spending, and according to independent research conducted by Evercore ISI Research in 2024, home improvement spend by housing units fell below its 50-year average. To best drive growth and value creation against this backdrop, your Board and management team have identified and begun executing on five clear strategic initiatives: 1. 2. 3. 4. 5. Investing in growing Driving customer Increasing brand Driving product Ensuring consistent the Pro business engagement through awareness innovation and customer experience CRM rollout carpet growth We strongly believe that the execution of our strategic In an effort to obtain the financial runway to execute on initiatives, including our CRM and Pro initiatives, will improve our strategic plan, in Q1 2024 we announced plans to the customer experience and help drive traffic to stores. pursue a sale of our approximately one million square foot Additionally, we are focused on unlocking cost savings, distribution center in Sandston, Virginia, in order to put us in and have a number of active work streams underway to a position to achieve our goals and provide us with liquidity further rationalize costs. In addition to actions taken last year as we weather the current operating environment. We also with respect to payroll and other cost reduction, we have retained Houlihan Lokey to pursue additional financing taken actions in the first quarter of the current fiscal year to alternatives. restructure and curtail expenses, which quarter-to-date have totaled approximately $4 million. In addition, the Company’s Despite the cyclical factors, we remain focused on our supply chain teams have been carefully managing execution and believe our strategy to increase brand inventory to improve working capital while still maintaining awareness and deliver a more consistent end-to-end appropriate levels of in-stock quality product assortment customer experience across our omnichannel network will for customers. As a result, the Company is well positioned gain traction and drive profitability. in the marketplace when the cycle for home improvement spending normalizes and long-term tailwinds driven by aging housing stock, increased household formation, and rising home values, begin to take shape. Conducting a Thorough Strategic Alternatives Process Your Board and management regularly evaluate the among other things: Company’s strategic direction and ongoing business • Technology and marketing investments; plans and review potential alternatives with a view toward enhancing value. As announced in August 2023, your • Diversification into new product lines; Board is undertaking an exploration of strategic alternatives • A potential sale of the Company’s Sandston distribution in response to receipt of multiple inbound expressions of center; interest regarding a potential transaction with the Company. • Potential strategic business combinations; and As part of this process, the Board and management team • Other transactions with third parties, including indications have worked diligently with the Company’s independent of interest and non-binding proposals from several financial and legal advisors to consider and evaluate, financial sponsors, many including multiple rounds of negotiations and proposals. Your Board assembled to discuss these alternatives and to determine the best path forward for the Company 20 times in 2023 and five times in the first five months of 2024. Throughout this process, your Board has remained focused on ensuring LL Flooring is taking all possible actions to drive value creation.
As part of the strategic alternatives review process, in April 2024, the Company received a non-binding unsolicited proposal from Live Ventures to acquire all of the Company’s outstanding shares of common stock for $2.50 per share in cash. Your Board is committed to a fair process for all interested parties and will continue to thoroughly review any credible proposal received to determine the course of action that it believes maximizes value. LL Flooring’s Highly Qualified and Engaged Director Nominees Your LL Flooring Board has the right mix of skills and experience to oversee the execution of the Company’s five core growth strategies, support the team’s delivery of high-touch service for our customers and drive value. Your LL Flooring Board comprises nine highly qualified and engaged directors, eight of whom are independent. At the 2024 Annual Meeting of Stockholders, Douglas T. Moore, Ashish Parmar and Nancy M. Taylor are standing for election. Douglas T. Moore Ashish Parmar Nancy M. Taylor Current Chairman and CEO Current Chief Information Officer Current LL Flooring Independent Board Chair; of Clean Core Solutions, Inc. of Standard Industries, Inc. Former CEO of Tredegar Corporation More than 25 years of retail More than 20 years of leadership More than 25 years of business, finance, experience, including as CEO and technology experience and leadership experience; brings strong of two public companies across luxury retail, logistics, and corporate governance knowledge as consumer electronics public company director at TopBuild Corp. and Malibu Boats, Inc. Vote today “FOR” ONLY LL Flooring’s Messrs. Moore and Parmar and Ms. Taylor have made significant contributions to your three highly qualified and engaged Board and the Company over their respective director nominees on the universal tenures, including overseeing the development WHITE proxy card of the Company’s five core growth strategies, collectively serving on all four Board Committees, and proactively refreshing the management team with four new corporate leaders added in the last two years to bring fresh perspectives to the Company during a period of industry and market pressure.
If Elected, Mr. Sullivan’s Focus Would be to Acquire the Company If elected to the Board, we believe the focus of Mr. Sullivan Your Board unanimously recommends that you vote “FOR” would be to push a personal agenda to acquire LL Flooring the election of each of the three nominees proposed by at a price that may undervalue the Company. The two your Board, Messrs. Moore and Parmar and Ms. Taylor, on additional candidates being put forth by Mr. Sullivan have your universal WHITE proxy card. longstanding relationships with him, and currently work for Your Board does not endorse Mr. Sullivan and his other F9 Investments or Cabinets to Go. two nominees or Mr. Hammann, and strongly urges you to The LL Flooring Nominating and Corporate Governance DISCARD and NOT vote using any gold proxy card that may Committee considers a number of factors in appointing a be sent to you by Mr. Sullivan or any proxy card that may director to the Board, including the ability of the prospective be sent to you by Mr. Hammann. If you have already voted nominees to represent the interests of all shareholders, the using a gold proxy card or other proxy card sent to you by extent to which the prospective nominees contribute to the either Mr. Sullivan or Mr. Hammann, respectively, you have range of talent, skills and expertise appropriate for the Board every right to change your vote and we strongly encourage and the extent to which the prospective nominees help the you to revoke that proxy by using the WHITE proxy card to Board reflect the diversity of the Company’s shareholders, vote in favor of ONLY the three nominees recommended by employees, customers and the communities in which it your Board—by Internet or by signing, dating and returning operates. All of the directors currently serving on your Board the enclosed WHITE proxy card in the postage-paid meet these criteria. While some of Mr. Sullivan’s candidates envelope provided. Only the latest validly executed proxy have industry experience, none except for Mr. Sullivan himself that you submit will be counted—any proxy may be revoked have any prior experience serving on the board of a public at any time prior to its exercise at the Annual Meeting. company, or strong corporate governance knowledge. Your vote is very important. Even if you plan to attend In accordance with the Company’s guidelines, two members the Annual Meeting, we request that you read the proxy of the Nominating and Corporate Governance Committee, statement and vote your shares by signing and dating who are not themselves nominees, interviewed Mr. Sullivan the enclosed universal WHITE proxy card and returning it in the postage-paid envelope provided or by voting via and his nominees along with Mr. Hammann. Subsequently, the Internet by following the instructions provided on the the Board determined none of Mr. Sullivan’s candidates nor enclosed universal WHITE proxy card. Mr. Hammann offered experience or skills that were not already represented by the Company’s current directors. In an effort to avoid a distracting and costly proxy contest and given the industry experience of Mr. Sullivan’s candidate, Vote today “FOR” ONLY LL Flooring’s John Jason Delves, the Board proposed to Mr. Sullivan that Mr. Delves could be appointed to the Board. However, three highly qualified and engaged director Mr. Sullivan rejected this proposed compromise and has nominees on the universal WHITE proxy card chosen to proceed with his unnecessary and self-serving proxy contest. If you have any questions or require any We firmly believe that LL Flooring’s current directors are assistance with voting your shares, please contact the right directors with the right experience and skillsets our proxy solicitor, Saratoga, at to oversee the Company’s strategic direction and to (888) 368-0379 | (212) 257-1311 maximize value. info@saratogaproxy.com. FORWARD-LOOKING STATEMENTS This letter includes statements of the Company’s expectations, intentions, plans and beliefs that constitute “forward-looking statements” within the meanings of the Private Securities Litigation Reform Act of 1995. These statements, which may be identified by words such as “may,” “will,” “should,” “expects,” “intends,” “plans,” “anticipates,” “assumes,” “believes,” “thinks,” “estimates,” “seeks,” “predicts,” “could,” “projects,” “targets,” “potential,” “will likely result,” and other similar terms and phrases, are based on the beliefs of the Company’s management, as well as assumptions made by, and information currently available to, the Company’s management as of the date of such statements. These statements are subject to risks and uncertainties, all of which are difficult to predict and many of which are beyond the Company’s control. The Company specifically disclaims any obligation to update these statements, which speak only as of the dates on which such statements are made, except as may be required under the federal securities laws. For a discussion of the risks and uncertainties that could cause actual results to differ from those contained in the forward-looking statements, see the “Risk Factors” section of the Company’s annual report on Form 10-K and Form 10-K/A for the year ended December 31, 2023, the Company’s quarterly report on Form 10-Q for the quarter ended March 31, 2024, and the Company’s other filings with the Securities and Exchange Commission (“SEC”). Such filings are available on the SEC’s website at www. sec.gov and the Company’s Investor Relations website at https://investors.llflooring.com.