Scandal hammers Lumber Liquidators in Q1

Lumber Liquidators reported a first-quarter loss of $7.8 million and announced that its CFO is resigning as allegations over the quality of its flooring continues to affect the company.

In the quarter, the company swung to a loss of $7.8 million, or 29 cents per share, compared to net income of $13.7 million, or 49 cents per share, a year ago. Revenue of $260 million in the period met analysts’ forecasts.

The company warned that that sales and margins will likely remain depressed this month, as it fights allegations that some of its Chinese-made laminate flooring products are unsafe.

The company also saidCFO Dan Terrell will leave the company in June. He has held the position since October 2006. The company appointed Ernst & Young veteran Gregory Whirley Jr. as interim CFO.

The Justice Department is seeking criminal charges against Lumber Liquidators in the ongoing investigation over the imported products. The investigation was first revealed in a CBS “60 Minutes” expose in early March, alleging that the company’s laminate flooring made in China contained high levels of formaldehyde. Lumber Liquidators maintains that it complies with applicable regulations for its products, including California standards for formaldehyde emissions.



In a filing with the Securities and Exchange Commission, the company revealed that the Department of Justice was seeking criminal charges under the Lacey Act which, among other things, bans illegally sourced wood products. More than 100 class-action lawsuits are pending.