Lumber Liquidators stock plummeted 26 percent last week Wednesday after its CEO, Robert Lynch, reported during the company’s earnings call that an upcoming episode of “60 Minutes” could make the company look bad. The company’s stock was trading at $65.01 when the call began at 10 a.m. EST. It finished the day at $50.62. Source: Google.
Lumber Liquidators stock plummeted 26 percent in one day last week after its CEO, Robert Lynch, reported during the company’s earnings call on Wednesday that an upcoming episode of “60 Minutes” could make the company look bad.
(March 2 Update: The stock dropped 24 percent after the TV show aired on Sunday night. Trading was halted Monday morning, but then resumed at 11:15 ET, according to CNBC.com)
The company also disclosed in its 10K filing with the U.S. Securities and Exchange Commission that the Department of Justice is contemplating filing criminal charges against Lumber Liquidators under the Lacey Act.
"We now believe the news program '60 Minutes' will feature our company in an unfavorable light with regard to our sourcing and product quality, specifically relating to laminates," Lynch said on the call.
The topic of the show concerns product sourcing and a lawsuit brought against the company in California that alleges its products’ formaldehyde emissions violated the law, he added.
He did not know when the show would air, but said it may be this weekend.
The company’s stock was trading at $65.01 when the call began at 10 a.m. EST. At the end of the call, a little more than an hour later, Lumber Liquidators stock hit $53.17. It finished the day at $50.62.
There are currently three lawsuits against Lumber Liquidators filed in California, two of which concern formaldehyde emissions, according to the company’s 10K filing with the SEC.
The company could also face criminal charges from the DOJ, according to its 10K filing:
“In recent communications, the DOJ indicated that it is contemplating seeking criminal charges under the Lacey Act… At this time, we do not have enough information to estimate a reasonably possible loss or range of loss that may result from actions by the DOJ as a result of its investigation.”
In the conference call, Lumber Liquidators CFO Daniel Terrell said he expects the company to be charged with a misdemeanor or felony.
The DOJ investigation began in September 2013, when federal agencies raided Lumber Liquidators Toano, Va.,-based headquarters.
Around the same time, the Environmental Investigation Agency had released a report that connected Lumber Liquidators to illegal logging in the Russian Far East.
Editor’s note: The story was updated to include Lumber Liquidators’ stock price as of Monday, March 2. The original article mentioned that an episode of “60 Minutes” may air on Sunday, March 1. That language was removed because the episode did air that day.
