FRANKLIN, Tenn. - F9 Investments, LLC, the largest shareholder of LL Flooring Holdings, Inc. (NYSE: LL), owning approximately 8.85% of the company's stock, has publicly challenged the LL Flooring Board of Directors, urging shareholders to vote for its three director nominees.
F9 Investments has criticized the board for what it perceives as strategic failures and erosion of shareholder value, and it seeks to replace current board members with its candidates to improve the company's performance and restore long-term value.
In a recent letter to shareholders, F9 Investments accused the LL Flooring board of resorting to personal attacks and factual distortions against its nominees, including Tom Sullivan, Jason Delves, and Jill Witter. The investment firm contends that these nominees possess the necessary experience and expertise to lead the company out of its current difficulties.
F9 Investments has also refuted LL Flooring's claims that its nominees are conflicted due to their roles at Cabinets to Go, stating that the flooring sales at Cabinets to Go do not meet the legal definition of a competitor. Additionally, F9 Investments highlighted the board's failure to acknowledge the settlement of a previous lawsuit between Cabinets to Go and LL Flooring, which resulted in Cabinets to Go being allowed to sell flooring and LL Flooring paying damages.
The investment firm also criticized the board's strategic review process, claiming it unfairly favored certain bidders and led to declining offers for the company, despite F9 Investments' offers to buy LL Flooring at a premium. Furthermore, F9 Investments has emphasized the need for immediate action, citing the company's underperformance relative to its peers and the potential for increased expenses and value destruction through a planned sale-leaseback of LL Flooring's primary asset.
F9 Investments is advocating for a vote on the GOLD proxy card for its nominees and a withhold vote for all LL Flooring nominees and Jerald Hammann in the upcoming shareholder meeting. The firm's financial advisor is Solomon Partners Securities, LLC, and its legal advisor is Dentons US LLP.
This news is based on a press release statement from F9 Investments, LLC.
In other recent news, LL Flooring Holdings, Inc. has been navigating significant strategic and financial challenges. The company's first quarter 2024 earnings reported a 21.7% decrease in total revenues and a 21.5% drop in comparable store sales. Despite an adjusted operating loss of $28.7 million for the quarter, LL Flooring is implementing cost management strategies, aiming for profitability at a sales level of $930 million to $1 billion.
The company is also urging its shareholders to vote for its three director nominees at the upcoming 2024 Annual Meeting of Stockholders, amidst a backdrop of challenges including an approximately 86% decline in share price and a loss of roughly $3 billion in market capitalization. The board is overseeing a transformation plan to capitalize on market opportunities and conducting a review of strategic alternatives, including a potential sale of the company.
These are the recent developments that investors should be aware of in the context of LL Flooring's current situation.
InvestingPro Insights
As F9 Investments, LLC, makes its case for a shift in LL Flooring Holdings, Inc.'s (NYSE: LL) board composition, a glance at the company's financials through InvestingPro provides a clearer picture of the challenges faced. LL Flooring's market capitalization stands at a modest $42.5 million, reflecting the significant erosion of shareholder value that F9 Investments criticizes. The company's revenue has seen a downturn, with a decline of 20.5% over the last twelve months as of Q1 2024, underscoring the concerns about the company's performance.
InvestingPro Tips suggest that LL Flooring operates with a significant debt burden and may have trouble making interest payments on its debt, which aligns with the urgency F9 Investments conveys for a change in direction. Additionally, with the stock trading at a low Price / Book multiple of 0.33 as of Q1 2024, it suggests that the market may not be recognizing the potential value of the company's assets relative to its share price.
Investors and shareholders considering the ongoing dispute may find additional insights and tips on InvestingPro, which currently lists 15 more tips for LL Flooring Holdings, Inc. These could provide further context to the company's financial health and the potential outcomes of the proposed board changes. For those looking to delve deeper, use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription at InvestingPro.
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