Shares of Lumber Liquidators did not open for trading Monday morning following a report on 60 Minutes Sunday night that the companys laminate flooring made in China may not meet Californias health and safety standards.
The shares had been down 25 percent in pre-market trading. The shares were halted and the New York Stock Exchange said there was news pending.
The 60 Minutes report said that Lumber Liquidators laminate flooring made in China contains high levels of formaldehyde, a carcinogen.
Denny Larson, executive director of nonprofit group Global Community Monitor, and environmental lawyer Richard Drury purchased boxes of laminate flooring from several retailers with Californiastores, including Lumber Liquidators, and had them sent to three certified labs for testing and found that Lumber Liquidators US-made laminate flooring had acceptable levels of formaldehyde, but every sample of its Chinese-made laminate flooring failed to meet California formaldehyde emissions standards, according to the report.
In addition, 60 Minutes bought 31 boxes of Lumber Liquidators Chinese-made laminate flooring at stores in Virginia, Florida, Texas, Illinois and New York to see how those tested. Samples were sent for testing at two certified labs. The report said that only one of the 31 samples of Chinese-made laminate flooring was compliant with California formaldehyde emissions standards.While flooring is legally allowed to contain formaldehyde, the 60 Minutes report said that California has strict standards for how much of the chemical the core boards in laminate flooring can emit.
Lumber Liquidators founder and Chairman Tom Sullivan said in an interview with 60 Minutes that the company is not required by law to test its finished products like 60 Minutes did.
Lumber Liquidators complies with applicable regulations for its products, including California standards for formaldehyde emissions for composite wood products, it said in a statement.These attacks are driven by a small group of short-selling investors who are working together for the sole purpose of making money by lowering our stock price, the company said. Lumber Liquidators said that it would fight these false attacks on all fronts.
We stand by every single plank of wood and laminate we sell all around the country, the company added.
On Feb. 25 Lumber Liquidators stock declined 26.4 percent, to $50.63, after President and CEO Robert Lynch said during a conference call that the company believed 60 Minutes was going to feature our company in an unfavorable light with regard to our sourcing and product quality, specifically related to laminates. Lynch said that Lumber Liquidators would vigorously challenge any false allegations or factual incorrect presentations.
Lumber Liquidators also disclosed in a regulatory filing on Feb. 25 that the Department of Justice may seek criminal charges against it under the Lacey Act, a US law that includes a ban on illegally sourced wood products and in many cases requires businesses to provide a lot of details about their wood shipments.
Lumber Liquidators said in the filing that it will continue to communicate with the Justice Department regarding its intentions and possible courses of action in this matter.
Last month Lumber Liquidators announced that it invested in a wood products quality testing lab that is housed within its new distribution center outside Richmond, Vir. A press release the company put out stated that the lab has two temperature- and humidity-controlled conditioning rooms, and two formaldehyde emission chambers that mirror the capabilities of the California AirResources Board and other emission testing facilities.
Shares of Toano, Vir.-based Lumber Liquidators closed Friday at $51.86 and had dipped to $38.91 a new 52-week low in pre-market trading.
Source: http://nypost.com/2015/03/02/after-60-minutes-report-lumber-liquidators-shares-do-not-open/
