A sign hangs above the entrance of a Lumber Liquidators store in Cicero, Ill.(Photo: Scott Olson, Getty Images)
Lumber Liquidators (LL), the embattled hardwood flooring retailer, said Thursday CEO Robert Lynch “unexpectedly” resigned, following weeks of struggles stemming from safety concerns related to its products.
The Toano, Va.-based company will search nationally for a replacement, it said. Company founder Thomas Sullivan will serve as acting CEO.
Lynch also stepped down from the board of directors. John Presley, its lead independent director, will be non-executive chairman of the board. The appointments are effective immediately.
Shares of the company plummeted 14% to $ 21.65 in morning trading.
Its shares have been battered — down 62% for the year — following a ’60 Minutes’ report in March over alleged high levels of formaldehyde in its laminate flooring products imported from China. The company has also revealed that it faced criminal federal charges over imported bamboo harvested illegally from protected animal habitats.
Formaldehyde is commonly found in industrial products. But it’s considered a carcinogen at high levels of exposure, and regulations limit the amount used in consumer products. The ’60 Minutes’ report claims three Chinese suppliers falsely labeled their products as being compliant to the exposure limit set in California, a claim the Lumber Liquidators has since verified.
Meanwhile, Lumber Liquidators suspended sales of all laminate flooring sourced from China pending completion of its internal review that will be handled mostly by Freeh Group International Solutions, the investigative company founded by former FBI director Louis Freeh.
The company posted a 6% gain in first quarter sales to $ 260 million, but swung to a loss of $ 7.8 million from $ 13.7 million of profit a year ago.
In providing an update of its products earlier this month, Lumber Liquidators said tests conducted by “independent, accredited laboratories” found that “over 97% of customers’ homes were within the protective guidelines established by the World Health Organization for formaldehyde levels in indoor air.” To conduct the test, the company said it sent about 26,000 testing kits to nearly 15,000 Lumber Liquidators customers. About 3,400 kits that were sent back to the company were tested.
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