Lumber Liquidators will stop selling its controversial laminate flooring sourced from China
The stock rose by up to 3% in pre-market trading.
It's down 47% since March 1, when CBS' "60 Minutes" aired a documentary that detailed apparent violations of regulatory standards on laminate flooring sourced from China.In a statement, the company said (emphasis added):
"Based on the review to date, it appears that the Company's Chinese laminate flooring suppliers have sold product to the Company that the suppliers have certified and labeled as compliant with California formaldehyde standards. However, we are further reviewing the underlying certification and labeling processes and practices of our suppliers. In light of this and mounting industry concerns relating to laminate products sourced from China, the Company this week decided to suspend sales of all laminate flooring sourced from China pending completion of the Special Committee's review."
The company said it sent out 26,000 testing kits to customers, and nearly 11,000 came back; it said 97% of them met standards set by the World Health Organization.
The "60 Minutes" team tested samples of Lumber Liquidators' flooring and found that it had levels of formaldehyde that exceed the limits set by the California Air Resources Board.
Lumber Liquidators said the team used an "improper method."
The Department of Justice is seeking criminal charges against the company under the Lacey Act, related to its imported products. The Consumer Product Safety Commission is also investigating the issue.On April 29, the Lumber Liquidators shares tumbled by more than 16% after the company reported first quarter earnings that missed investors' expectations.
In the release, the company said legal expenses dragged down earnings; it is aware of 103 class-action lawsuits that were filed since the "60 Minutes" episode aired.