Thursday, May 21, 2015

CAPTAIN ABANDONING SINKING BOAT: Lumber Liquidators CEO Resigns

MAY 21, 2015

Lumber Liquidators Holdings Inc., under federal investigation over allegations that it sold toxic flooring, said Chief Executive Officer Robert Lynch unexpectedly resigned from his post.

Company founder Thomas Sullivan is serving as CEO during the search for a permanent replacement, Toano, Virginia-based Lumber Liquidators said Thursday in a statement. Lynch also stepped down from the board, and John Presley, the company’s lead independent director, will become nonexecutive chairman.

Lumber Liquidators is trying to win back customers after “60 Minutes” reported in March that said it sold Chinese-produced laminate flooring with toxic levels of formaldehyde, a known carcinogen. While the company assured consumers its products are safe, sales have slid and the U.S. Consumer Product Safety Commission is probing the allegations.


John Feld, a spokesman for Lumber Liquidators, declined to comment beyond the statement.

The shares tumbled as much as 17 percent to $20.92 in New York. Lumber Liquidators had already slid 62 percent this year through Wednesday.

Lumber Liquidators earlier this month suspended sales of laminate made in China and said a special board committee, with help from former FBI director Louis Freeh’s consulting firm, was reviewing its suppliers in the country.

U.S. Standards
The company said then that its Chinese suppliers had certified and labeled the flooring as compliant with standards in the U.S. When asked if the company was still willing to say its products are safe, a company spokesman declined to comment beyond the statement.


The “60 Minutes” report, prompted by research from investors who were betting against Lumber Liquidators stock, has rippled throughout the flooring industry. Home-improvement retailer Lowe’s Inc. earlier this month stopped selling a line of Chinese-made laminate flooring after one of Lumber Liquidators’ critics raised questions about the brand’s safety.