YEAR ENDED DECEMBER 31, 2008 Our Customers Say It Best!

2008 YEAR ENDED DECEMBER 31, 2008 Our customers say it best! ”WITH THE EXPERIENCE, QUALITY AND PRICE, LUMBER LIQUIDATORS HELPED US TO GO FROM INEXPERIENCED DO IT YOURSELF CUSTOMERS TO CONFIDENT DO IT AGAIN CUSTOMERS.” Gene and Diana S., Reno, Nevada “In March of this year, my husband and I purchased a second home and I knew we would be replacing the living room carpet with a Bellawood floor. The floor is beautiful but I wanted to thank you personally for the wonderful installer recommendation.” Patrice & Patrick W., Evergreen, CO “I HAVE JUST PUT YOUR GORGEOUS FLOORS IN THE LIVING ROOM AND CAN’T BELIEVE ALL OF THE MONEY I HAVE SAVED; I HAVE RECOMMENDED YOU TO SEVERAL OF MY FRIENDS THAT ARE PUTTING IN WOOD FLOORS ALSO!!” Mark K., Renton, WA “WE DID THE WHOLE HOUSE & IT WAS VERY EASY TO INSTALL. WHAT A BEAUTIFUL PRODUCT! THANKS!” Cindy B., Henderson, NV April 17, 2009 Dear Shareholders, Throughout 2008, Lumber Liquidators remained focused on what we do best: offering a unique value proposition to our customers through a flexible, yet resilient business model. While 2008 will be remembered for the unprecedented market volatility of the fourth quarter and the resulting economic challenges leading into 2009, we were pleased with our achievements for the year and encouraged by our performance. In difficult economic times, more customers sought our superior selection of quality products that we offered at everyday low prices and made available within their timetables. This is our value proposition and our passion. The hardwood flooring market is highly fragmented, and we believe we will further extend our leadership position by continuing to enhance this value proposition and expand our reach through new store openings and effective marketing. The completion of our initial public offering in November 2007 and the profitability of our store model established a solid financial position for Lumber Liquidators that is unique in our industry. This financial flexibility allowed us to focus on building our infrastructure and making operational improvements throughout our organization that yielded benefits in 2008 and set the stage for continued positive financial performance in the future. We are mindful of the challenges anticipated in 2009, but excited about our long-term growth opportunities. Maintained Track Record of Strong Financial Results Much of our success last year was due to our ability to expand our market share at a relatively low cost as well as remain flexible in our approach to operating within a challenging economy. Our key financial objectives for 2008 included net sales growth, margin expansion and free cash flow generation even as we broadened the footprint of our low-risk, high return store base. We were able to reach or exceed our financial expectations for the full year with: • Net sales growth of 19.0% to $482.2 million; • Gross margin expansion of 150 basis points to 34.8%; • Operating margin of 7.7%; • Fully-diluted earnings per share of $0.82; • Cash and cash equivalents at $35.1 million; and, • Free cash flow of $2.0 million. (Free cash flow is defined as Net Cash Provided by Operating Activities less Net Cash Used In Investing Activities.) Grew and Strengthened our Business The investment in our store support infrastructure which we began in 2006 continued to contribute to our performance in 2008 and further strengthened Lumber Liquidators’ foundation for long-term growth. Throughout the year, initiatives in store operations, merchandising and logistics allowed us to successfully implement our new store opening targets and expand operating margin, while marketing and advertising resources were deployed to appeal to evolving consumer demand. Overall, we enhanced our value proposition, customer satisfaction and competitive position through the following: • We successfully achieved our store expansion goal for the year. During 2008, we opened 34 stores in a mix of new and existing markets, expanding our store base to more than 150 locations in 44 states. Our unique and flexible store model continued to enable our new stores to generally become profitable within three months after opening and return the initial cash investment within eight months. As a group, our new stores consistently achieved or exceeded our expectations and made significant contributions to our strong financial performance in 2008. With a short lead-time and minimal capital investment needed to open a store, combined with a quick return on investment, we are able to capture market share in the highly-fragmented hardwood flooring market, even in a difficult macroeconomic environment. • We navigated a changing macroeconomic environment with a flexible approach to marketing. Our brand represents quality and value to our customers. The high levels of brand recognition that we have established for our entire chain and many of our individual products helped us drive consumer demand to store locations generally not in high-traffic, or high cost areas. In 2008, we responded to the dynamic changes in the economic environment through a flexible marketing message. As consumers became more price and value conscious, we were able to emphasize our value proposition by shifting more of our advertising from a longer-term branding message to a call-to-action, focused on specific offerings and promotions. • We continued to improve execution and generate operational efficiencies. As we continued to invest in our people and processes, we were able to further strengthen traditional retailing disciplines focused on consistent store operations, better merchandise planning and efficient logistics. We broadened our merchandise assortment, particularly in certain premium products, committed to a more consistent in-stock position and reduced the total miles driven from our warehouse to the sales floor. We also strengthened our merchandise planning and forecasting efforts with our vendor- mills, and enhanced our liquidation procurement efforts, which are a key part of our promotional strategy. Furthermore, we significantly broadened training for in-store sales personnel and enhanced the layout of our stores to make them easier to shop. In addition to these improvements, we recently expanded our business partnership with The Home Service Store, allowing us to offer HSS installation services in every store in our chain and market a full, start-to-finish product and service package to customers. Continued Opportunities for Growth and Improvement We expect 2009 will be challenging, but we remain excited about our growth prospects, as we continue to: • Benefit from our strong value proposition and high brand recognition; • Leverage our proven store model as we open new stores with minimal upfront costs; • Gain additional market share in the highly fragmented hardwood flooring market; • Increase operational efficiencies; and, ultimately, • Drive sales and earnings growth. We believe that our low-cost, adaptable store model and target market, which primarily consists of existing homeowners, will continue to afford us sufficient protection from a housing market which is expected to remain somewhat volatile near-term. The decision to replace or install hardwood flooring is a popular first step for many homeowners who are seeking to make improvements. We are increasingly seeing homeowners choose hardwood flooring for its durability, classic style, and ease of installation and we have been successful in attracting these customers to Lumber Liquidators due to our exceptional value proposition. In addition, we are embarking on new initiatives to better serve our customer by driving additional efficiencies within our business. As an example, we will implement a pilot program where our Asian vendors, supplying a range of various products, can ship to a central warehouse in China and a single container will be prepared with a variety of flooring for direct to store shipment. As this is rolled out across our store base over time, we see an opportunity to benefit from additional reductions in transit time and costs, as well as continued improvement in our in-stock positions and merchandise availability. All of this will lead to improved customer satisfaction and strengthen our competitive advantage. As we move ahead, our solid capital structure and debt-free balance sheet will provide us with added flexibility to execute our growth strategy in 2009. During the year, we plan to open 30 to 36 new stores and take advantage of a time when many large and small retailers are cutting back on their expansion plans. Furthermore, we remain confident that customers will continue to appreciate our unique offering which provides the right balance of high quality products at low prices. We look forward to sustained, long-term growth as we further develop our business and gain additional market share in 2009 and beyond. As always, we appreciate the ongoing support of our customers, shareholders, vendors and employees and we look forward to continuing this journey together. Tom Sullivan Jeffrey Griffiths Founder and Chairman of the Board President and Chief Executive Officer 2008 Financial Highlights $675 $600 Net Sales $525 $482.2 $450 $405.3 $375 $332.1 $300 MILLIONS $244.9 $225 $171.8 $150 $75 $0 2004 2005 2006 2007 2008 175 Stores Open 150 150 34 125 116 25 100 91 76 15 75 57 19 50 17 25 Beginning of the year 40 57 76 91 116 0 Net new stores 2004 2005 2006 2007 2008 $28.0 Net Income $24.0 $22.1 $20.0 $16.0 $12.9 MILLIONS $12.0 $10.7 $11.3 $8.0 $8.0 $4.0 $0 2004 2005 2006 2007 2008 1% Other 11% Moldings & Accessories 11% Bamboo & Cork 13% Laminates 64% Hardwood (Solid & Engineered) Lumber Liquidators 2008 Product Mix BOARD OF DIRECTORS EXECUTIVE OFFICERS SHAREHOLDER INFORMATION Thomas D. Sullivan Jeffrey W. Grifﬁths Founder and Chairman of the Board, President and Chief Executive Ofﬁcer Corporate Address Lumber Liquidators, Inc. Lumber Liquidators, Inc. Rick A. Boucher 3000 John Deere Road Macon F.

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