Lumber Liquidators is defending itself against allegations that the retailer’s hardwood flooring fails safety tests.
The specialty retailer of hardwood flooring is in the crosshairs of a report by television news program “60 Minutes,” which aired a special on Sunday that alleged the company sold flooring with higher levels of formaldehyde than permitted under California’s health and safety standards.
The news has badly bruised Lumber Liquidators’ (LL) stock since last week, when media reports said the “60 Minutes” report would cast Lumber Liquidators in a negative light. Shares, which traded near $70 last week, have slumped in recent days and were trading near $40. The stock is down over 20% on Monday alone.
“We stand by every single plank of wood and laminate we sell all around the country,” said Lumber Liquidators in a Securities and Exchange Commission filing.
The retailer, which generated $1.05 billion in revenue in 2014, said it was in compliance with the California Air Resources Board (CARB), which is the only regulator of composite core emissions. The company said it also adheres to those standards in other regions even though the regulations only apply to California.
“We believe that 60 Minutes used an improper test method in its reporting that is not included in CARB’s regulations and does not measure a product according to how it is actually used by consumers,” the retailer said. “Our chairman addressed the differences and our position on the test methodology but 60 Minutes chose not to include it.”
CBS’s “60 Minutes” reportedly tested the retailer’s floorings in several states for levels of formaldehyde, a cancer-causing chemical. CBS reportedly found that out of the 31 samples tested, only one was compliant, according to Reuters.
Lumber Liquidators competes with national and local retailers of hardwood flooring. The company, which was founded in 1994 and debuted on the public market in 2007, operates 352 retail stores. The retailer and two large competitors — Home Depot (HD) and Lowe’s (LOW) — control about one third of hardwood flooring retail market.