Hardwood retailer Lumber Liquidators Holdings Inc (NYSE:LL) stated it would suspend sales of all laminate flooring obtained from China. This is following accusations that the products had an excessive amount of the cancer-causing formaldehyde.
The firm is under U.S. government investigations after CBS’s “60 Minutes” show made the accusations in March. It was also reported that in certain cases levels of formaldehyde were more than 13 times the state’s limits. There are concerns that Lumber Liquidator’s Chinese suppliers wrongly marked some laminate flooring products as compliant with California’s safety standards.
On Thursday, the firm said that it had roped in Louis J Freeh, the former director of the Federal Bureau of Investigation to assist in reviewing its compliance policies.
The flooring retailer started giving free indoor air quality tests to concerned customers. On Thursday, it disclosed the results of 3,400 testing kits. It said that according to an independent analysis, 97% of homes were within the guidelines set by the World Health Organization for indoor formaldehyde levels.
The report has caused the firm’s stock to tumble and triggered an investigation by the U.S Consumer Product Safety Commission. The firm obtains about half its laminates from China, but analysts downplayed the effect from the suspension on its balance sheet.
On Thursday Lumber Liquidators Holdings Inc (NYSE:LL)’s shares increased as much as 7.2%. The stock has almost halved after the CBS broadcast on March 1.
While the air quality kits can determine overall formaldehyde levels in the air, they cannot identify its source. There is no federal standard for formaldehyde in wood products. However, the Environmental Protection Agency is on the verge of issuing a final rule.
The retailer said it had assembled a team to investigate its Chinese laminate and would stop sales of the flooring until that review was complete. The firm stated that it was following WHO’s guidelines as there did not exist any national standard for recommended indoor home air concentrations in the United States.
