On Monday, trading resumed in Lumber Liquidators after trading transactions in the plummeting stock were stopped following a report on CBS’ 60 Minutes that the company was selling flooring that contained higher levels of formaldehyde than was permitted under the safety and health standards of California.
The company’s stock dropped 21% in early afternoon trading after trading on Monday finally restarted just after 11:15 EST. Lumber Liquidators stock had dropped by 24.8% prior to the opening bell on Monday.
A segment on 60 Minutes Sunday night said it had tested flooring in five states for formaldehyde levels. Of the 31 samples of laminate flooring from China, only one was compliant with the emissions standards for formaldehyde. Some had been over 13 times more than the limit in California, according to the CBS news shows.
Lumber Liquidators however, said it has complied with all applicable regulations that cover its products and that include the standards for California formaldehyde emissions.
A company statement said that the attacks had been driven by a group of investors who were short-selling and working together for the only purpose of making money through having the stock price plummet.
Shares at the company dropped as well on news of the report last week. In all, the stock has dropped close to 43% over the past week.
Lumber Liquidators announced that it believes the news show on CBS used a test method that was improper that does not measure its product according to how it ends up being used by its customers. The company also said that it had documentation that supported each step in the production process.
The flooring material retailer has also alleged that its chairman addressed the test methodology of the company, but that 60 Minutes chose not to broadcast that information.
A managing partner and found of a capital management firm who was the one to bring the story to 60 Minutes, said that Lumber Liquidators has appeared to come up with their own protocol for testing… so it is they that are doing the bogus testing.