Lumber Liquidators On Defense After Critical News Report (NYSE:LL)

Lumber Liquidators has shifted into crisis control mode after a piece critical of the company’s products aired on the CBS News program “60 Minutes.” The report claimed that the discount flooring retailer sold laminate wood flooring from China that contained levels of formaldehyde that violated safety limits set by the California Air Resources Board. Since the report aired on March 1, the company’s stock price has fallen nearly 30 percent and its sales had dropped about 7.5 percent when compared with the same period of 2014. Lumber Liquidators has disputed the testing methods used by the news program and called the accusations unfounded.

Laminate flooring is an artificial product that is cheaper than hardwood and other higher-end wood flooring products. Each board is made up of various materials, including wood, that is glued together with an adhesive that typically includes formaldehyde. It is this formaldehyde that can seep into the air over time. Formaldehyde is a known carcinogen with long-term exposure, can aggravate asthma, and can cause immediate symptoms like burning of the eyes and throat with short-term exposure.

Lumber Liquidators has announced that it would offer free air testing kits to consumers who purchased the flooring from one of their stores. The indoor air quality test kits will be analyzed by accredited laboratories with the results emailed to the customer within a week to 10 days. However, the customers will not be able to tell if the contamination is coming from the flooring or from other elements in their home known to emit formaldehyde, like furniture and disinfectants. The indoor air test kits does not identify the source of the contaminant.

The company reports that fewer than 1,000 customers have requested air quality testing kits so far. Federal regulators, including the Environmental Protection Agency and the Consumer Product Safety Commission, may conduct an investigation into the safety of the company’s products.