Dive Brief:
- The Centers for Disease Control and Prevention (CDC) says that it previously underestimated the cancer risk resulting from Chinese-made laminate flooring sold at Lumber Liquidators.
- Lumber Liquidators stock fell 19.8% to $11.40 upon the announcement, after already losing about three-quarters of its value since a 60 Minutes exposé last year brought the substandard products to attention.
- The retailer says it has boosted its quality-control procedures, stopped sale of the flooring products, and promised to provide indoor air testing in consumers’ homes free of charge.
Dive Insight:
Shares of Lumber Liquidators—once an investor darling among retail chains—took another hit yesterday over the cancer risks related to Chinese-made laminate flooring after the Centers for Disease Control and Prevention (CDC) revised its cancer risk report estimates upward. Shares fell nearly 20% to $11.40 in trading yesterday.
Two weeks ago, the CDC estimated the risk of cancer resulting from the leaching of formaldehyde at two to nine cases per 100,000 people, but the agency now says that it neglected to convert its measurement of indoor air space from feet to meters. As a result, CDC revised its estimate to six to 30 cases per 100,000 people.
A 60 Minutes report aired in March 2015 found that certain laminate flooring products sold by the retailer emit too much formaldehyde, a known carcinogen and a chemical that can exacerbate respiratory issues.
“We strongly stress taking steps to reduce exposures, which should alleviate respiratory and eye, nose and throat irritation,” a CDC statement said. “These steps should also reduce the cancer risk.”
Lumber Liquidators says it has boosted its quality-control measures, suspended sales of Chinese laminates and offered free air tests to customers. However, the company took more than two months halt sales of suspect products last year, and pled guilty to charges of making false declarations on import documents, paying millions in a settlement.
With shares at historic lows and little trust left, Lumber Liquidators needs to make a PR push fast if it wants to stay afloat—or risk liquidation itself.
