When Lumber Liquidators stock took a tumble after the damaging 60 Minutes report, one concern that was raised regarding that report was the lack of details regarding the techniques used to test the company’s products. The news program looks to put that concern to rest, however, by releasing more documents that detail the results of the tests and explains how the flooring samples were tested. Here are the results of some of those tests as given in the documents shared with ValueWalk.
How Lumber Liquidators’ floors were tested
Copies of the documents were shared with ValueWalk. They describe the testing method that was used as “CDPH Standard Method V1.1 (Standard Method for the Testing and Evaluation of Volatile Organic Chemical [VOC] Emissions from Indoor Sources Using Environmental Chambers).” The testers calculated the “estimated VOC Concentrations” using “Equation 3.2a in Section 220.127.116.11 of the CDPH Standard.”
As one analyst suggested, the boxes that were tested were purchased from a number of Lumber Liquidators stores from around the U.S. Six of the boxes came from a store in Leesburg, Va., six were from a store in Miami Gardens, Fla. And three of them came from a store in Carrollton, Tex.
Are the test results accurate?
This means that the flooring tests were not conducted on products that were fresh out of the Chinese mills they came from before they were finished and contaminants like glue were added. However, the testers did scrape off the foam pad that was on the flooring sample and remove the backing using a planer, shaving off between 0.01 and 0.03 inches from the sample board. The testers set the boards face to face, and only the core of the fiberboard was exposed in the test chamber.
Lumber Liquidators management blasted the 60 Minutes report and scheduled a business update conference call for next week Thursday. Now I am certainly no expert on this sort of thing, but from what I have read on the topic, it seems likely they will argue that the test results are not valid because of the method that was used to test the flooring products.
Lawmaker calls for investigation
In order to appease Wall Street, Lumber Liquidators may have to submit to testing using other methods. However, it could (and probably will) be argued that those test results won’t be valid because the company is aware of the tests being done and thus is on its best behavior in order to show compliance.
A senator in Florida has called for federal investigators to look into the formaldehyde content of Lumber Liquidators’ flooring. Sen. Bill Nelson, a Democrat on the Commerce Committee, sent a request to the Consumer Product Safety Commission, the Centers for Disease Control and Prevention and the Federal Trade Commission, reports CNN Money.
Nelson reportedly wants to find out if Lumber Liquidators was guilty of an “unfair or deceptive trade practice” because the labels on the flooring it sold indicated that they were compliant with California’s stringent regulations. Here are some of the labels as shown in CBS’ documents.
60 Minutes reported that they actually are not, although the company denies the allegation.
As of this writing, shares of Lumber Liquidators were up by 2.31% to $36.40 per share.