Lumber Liquidators shares are crashing after a damning '60 Minutes' report
In pre-market trade on Monday, shares of Lumber Liquidators were down as much as 20%.
On Sunday night, "60 Minutes" aired a report showing a factory in China making laminate flooring for Lumber Liquidators that was deliberately mislabeled to show that it complied with California regulations, when in fact it did not.
The "60 Minutes" report centered on a elevated levels of formaldehyde, a known carcinogen, in Lumber Liquidators laminate flooring products sold in California.
"60 Minutes" spoke to plaintiffs in a lawsuit that allege Lumber Liquidators has sold laminate products in California that have formaldehyde levels that exceed that state's standards by 6 or 7 times, and the newsmagazine noted that the state's standards are set to be adopted nationwide later this year.
Lumber Liquidators, which saw its stock nearly double in 2013 and has seen shares fall more than 50% since the beginning of 2014, said on in its earnings conference call last week that the upcoming "60 Minutes" report was likely to be tough on the company. Lumber Liquidators shares fell about 20% last week.
On its earnings call, CEO Robert Lynch said, "We now believe the news program '60 Minutes' will feature our company in an unfavorable light with regard to our sourcing and product quality, specifically related to laminates."
And the investor reaction on Monday morning seems to confirm this view.