Lumber Liquidators' stock price fell 11 percent to $76.63 following the release of a report finding high levels of formaldehyde in the company's China-sourced engineered flooring.
"There are reasons to believe the company has been knowingly selling noncompliant products to consumers and the stated compliance on some of its products is inaccurate," writes Xuhua Zhou of stock market analysis website SeekingAlpha.com in a letter to Mary D. Nichols, chairman of the California Air Resources Board. Accompanying the letter was a report from Berkeley Analytical showing that a particular product that was labeled "California 93120 Phase 2 Compliant for Formaldehyde of Plywood" contained high levels of the carcinogen.
The letter says that after reading complaints from customers who purchased Lumber Liquidators engineered products, Xuhua commissioned Berkeley Analytical to test product samples purchased in California. "Among the samples tested, at least one product was identified to be in gross violation of CARB phase II emission standardâŚThe reading from Berkeley Analytical comes out at 0.17 ppm, three and half times the maximum level allowed under [Airborne Toxic Control Measures]," Xuhua wrote. CARB phase II allows formaldehyde levels of only 0.05 ppm.
Xuhua's report first surfaced on June 20. On June 21, Lumber Liquidators stock dropped 11 percent, according to Woodworking Network.
