Lumber Liquidators Holdings Inc (NYSE:LL) shares plunged by more than 19% to as low as $10.95, close to the 52-week low of $10.53, after the Centers for Disease Control warned that the retailer’s laminate flooring appears to carry an elevated risk of cancer for consumers who installed it in their homes. Concerns about high levels of formaldehyde in the company’s Chinese-made laminate floors have been an overhang for its stock since short-sellers claimed in a damaging report on 60 Minutes last year that they contained more formaldehyde than the company said they had.
Notorious short-seller Whitney Tilson was one of the first to cry foul on the retailer’s Chinese flooring, although he began covering his short position in December.
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That report caused U.S. health officials to investigate.
CDC warns of cancer risk in Lumber Liquidators’ flooring
Earlier this month, the CDC said the level of exposure to formaldehyde in some of the laminate flooring sold by Lumber Liquidators Holdings Inc (NYSE:LL) resulted in two to nine cases of cancer per 100,000 consumers who had them installed in their homes. However, officials now say it is higher than they previous estimated. Their new calculations suggest that consumers who installed some of the retailer’s Chinese-made flooring products in their homes are approximately three times more likely to develop cancer, reports USA Today.
Their new estimate puts six to 30 cancer cases per 100,000 people with the retailer’s floors in their homes. The reason the CDC came up with such a large difference between its previous estimate and its new one was because that estimate used the wrong number to estimate ceiling height in calculating the risks from formaldehyde exposure.
The CDC also found increased incidences of other health problems among consumers with some of the flooring sold by Lumber Liquidators. Health officials also found higher risks of respiratory problems like asthma and irritation of the eye, nose and throat.
Lumber Liquidators says the CDC is wrong
In a statement today, a spokesperson for Lumber Liquidators said that the agency’s “revised calculation overestimates any potential health risks from these products.” The person also emphasized that CDC officials continue to review their calculations.
Lumber Liquidators Holdings Inc (NYSE:LL)’s sales have tumbled since last year’s report and the company’s CEO resigned amid the controversy. Sales have yet to recover, and today’s report from the CDC certainly won’t help anything.
The retailer stopped selling Chinese-made laminate flooring about a year ago following the initial report from 60 Minutes. It also began offering consumers who had purchased these floors free air quality tests. The CDC did not say whether the flooring products it tested are still being sold in the company’s stores, notes CNN.
In addition to falling sales, Lumber Liquidators has been hit by lawsuits filed on behalf of consumers who bought its flooring and was sentenced by the Justice Department on charges of making false statements on its import documents regarding the sourcing of some of its wood products and smuggling illegal wood into the U.S. The company paid $10 million to settle those charges.