Lumber Liquidators Holdings Inc Surges After Investigation Confirmed

Lumber Liquidators Holdings Inc Surges After Investigation Confirmed

Lumber Liquidators is officially under investigation by the U.S. Consumer Product and Safety Commission. The agency said today it is investigating the company’s flooring, which reportedly failed a series of tests conducted by 60 Minutes.

Since those tests, debate about whether the proper testing method was has raged on.

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Wall Street sides with Lumber Liquidators

Shares of Lumber Liquidators rose as much as 6.38% to $30.67 per share after regulators confirmed that they’re investigating the flooring company. Clearly investors think the company will be exonerated of the allegations about formaldehyde content in its flooring products.

60 Minutes and short-seller Whitney Tilson claimed that Lumber Liquidators’ products contain levels of formaldehyde that are unsafe and greater than the restrictions set by the California Air Resources Board (CARB).

Lumber Liquidators probe to last months

According to CNBC, CPSC Chairman Elliot Kaye said it will take months to get the results of the agency’s tests on Lumber Liquidators’ products back. He also said that it’s just too early to know if they will require the company to recall its products.

A spokesperson for Lumber Liquidators provided the following statement about the investigation to ValueWalk:

“Lumber Liquidators is fully cooperating with the U.S. Consumer Product Safety Commission and has already provided a significant amount of testing and safety information to the agency staff. We have been in direct communication with CPSC staff over the past several weeks and expect them to review our products using sound science and test methods that evaluate finished flooring as used in consumers’ homes. It is our firm belief that finished product testing, rather than deconstruction, is the best approach to determine consumer safety. We look forward to working with the CPSC on this matter.”

Details on the CPSC’s investigation

According to Kaye, they are starting with Lumber Liquidators’ products that are made in China. The allegations regarding the formaldehyde content were mainly focused on the Chinese-made products. However, the chairman also said they might eventually look at the company’s other flooring products.

He also said their testing will be focusing on how the products are used inside of homes. The CPSC believes testing finished products rather than deconstructing them is the best way to determine if they are safe for consumers. Further, the agency will be testing the products for safety and not for whether they comply with CARB standards.

Lumber Liquidators stands by the safety of its products and is offering free air quality testing for customers who purchased qualifying products.

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