U.S. seeks criminal charges against Lumber Liquidators
Toano, Virginia — The Justice Department is seeking criminal charges against Lumber Liquidators in an ongoing investigation over imported products.
The company revealed the investigation in a regulatory filing, as well a surprise loss for the quarter and the departure of its chief financial officer, sending share plunging 17 percent before the opening bell
In early March the CBS news show “60 Minutes” reported that Lumber Liquidators’ laminate flooring made in China contained high levels of formaldehyde, a carcinogen. Lumber Liquidators Holdings Inc. has said that it complies with applicable regulations for its products, including California standards for formaldehyde emissions.
The company said that March sales declined 12.8 percent due to the allegations.
There are 10 stores located throughout Michigan.
In a filing with the Securities and Exchange Commission, the company said the Department of Justice was seeking criminal charges under the Lacey Act which, among other things, bans illegally sourced wood products. The company had said in December that the Justice Department was contemplating criminal charges.
Lumber Liquidators also said on Wednesday that it was aware of more than 100 pending class-action lawsuits against it related to its laminate flooring made in China.
For the period ended March 31, the Toano, Virginia, company lost $7.8 million, or 29 cents per share, for the period ended March 31. That compares with a profit of $13.7 million, or 49 cents per share, a year earlier.
The loss caught industry analysts off guard. They had projected a profit of 15 cents per share, according to a survey by Zacks Investment Research.
The hardwood floors retailer posted revenue of $260 million.
Sales at stores open at least a year dropped 17.8 percent in March. For the first quarter, the figure slipped 1.8 percent.
CFO Dan Terrell will leave the company in June. He has held the position since October 2006. The company appointed Gregory Whirley Jr. as interim CFO. Whirley has been with Ernst & Young LLP.
Lumber Liquidators’ stock tumbled $6.66 to close at $26.76. Its stock has slumped 50 percent since the beginning of the year.
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