The company’s stock fell 25% in premarket trading Monday morning, and shares did not open for trading until about 11:15 a.m. ET. Lumber Liquidators filed a Form 8-K with the U.S. Securities and Exchange Commission (SEC) Monday morning as well, claiming that “60 Minutes” used an “improper test method” in its reporting that the company’s products contain high levels of formaldehyde, a known carcinogen.
The company said in its filing that its products comply with regulations set by the California Air Resources Board (CARB), currently the only regulator of composite core emissions in the United States. Lumber Liquidators claims that the test used by “60 Minutes” “does not measure a product according to how it is actually used by consumers.”
That is a pretty weak defense, and it was not helped by the on-air statement of the company’s founder and chairman, Thomas Sullivan. According to analysts at Piper Jaffray cited at Business Insider, Sullivan apparently conceded that the “video evidence called into question the company’s oversight of its providers.”
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In its statement to the SEC Monday morning, Lumber Liquidators also placed blame for the company’s crumbling share price on an attack on the stock by short sellers. Just looking at the chart for the past 12 months, the company’s stock has dropped more than 60%, sliding downward since early March last year from around $110 to around $77, before plunging to around $58 after reporting quarterly earnings in early July.
Shares dropped to a prior low of around $48, following another poor quarterly report in October. The stock had been slowly recovering since then until word of the “60 Minutes” report surfaced last week. Then, of course, the “60 Minutes” broadcast led to Monday morning’s debacle.
Maybe short sellers are attacking, but the company’s performance hasn’t done anything really to counter the shorts, and the “60 Minutes” story will not help.
Lumber Liquidators ends its filing with a statement that the company “stand[s] by every single plank of wood and laminate we sell all around the country and will continue to deliver the best product at the best price to our growing base of valued customers.”
Lumber Liquidators’ stock traded down about 22% in the early afternoon Monday to $40.59, after posting a new 52-week low of $38.19, a neighborhood the stock hasn’t visited since the summer of 2012. The 52-week high is $110.52.
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