Lumber Liquidators says Chinese-made products safe
60 Minutes report found flooring had high levels of formaldehyde, a carcinogen.
TOANO, Va. — Lumber Liquidators is refuting a “60 Minutes” report that raised health concerns about some of its Chinese-made laminate flooring products and pushed its stock price to its lowest level in more than two years.
In a filing with the Securities and Exchange Commission, Lumber Liquidators said all of its laminate flooring meets the safety standards set by regulators throughout the US. The defence came the day after “60 Minutes” aired findings that some of Lumber Liquidators’ flooring made in China had high levels of formaldehyde, a carcinogen.
The tests by three certified labs concluded the amounts of formaldehyde failed to meet California’s emissions standards.
Lumber Liquidators’ stock plunged $13.03, or 25 per cent, to close at $38.83. Earlier in the session, the shares fell to $38.19, the lowest since July 2012.
The Toano, Va. company asserted that the doubts being raised by its products are being fuelled by “short sellers” – investors that make money by placing bets that specific stocks will drop in value.
The “60 Minutes” report included interviews with Denny Larson, executive director of non-profit group Global Community Monitor, and environmental attorney Richard Drury. Larson and Drury purchased boxes of laminate flooring from several retailers with stores in California, including Lumber Liquidators. They sent the products to the labs for testing.
While Lumber Liquidators’ flooring made in the US met California’s emissions standards, every sample manufactured in China failed.
Lumber Liquidators said random testing of its six laminate flooring suppliers in China determined the products were “safe and compliant.”
“We stand by every single plank of wood and laminate we sell all around the country,” the company said in its SEC filing.
Lumber Liquidators has 354 stores in the US and Canada, including 37 in California. The company earned $63 million on sales of $1.05 billion last year.
The “60 Minutes” report is the second damaging blow to Lumber Liquidators in less than week.
In a separate SEC filing last Wednesday, the company disclosed the US Justice Department may seek criminal charges against it under the Lacey Act, which is a US law that includes a ban on illegally sourced wood products.
Lumber Liquidators’ stock has plummeted by 44% since Feb. 25 filing.