Product Liability

Will Lumber Liquidators profits dip after reports of possible product danger?

laminate flooring Will Lumber Liquidators profits dip after reports of possible product danger?Despite a “60 Minutes” special report on the presence of a carcinogen, formaldehyde, in the company’s flooring, Lumber Liquidators surpassed analysts’ sales estimates for the first quarter of 2015. According to the report, not only does the Lumber Liquidators’ flooring contain excessive levels of formaldehyde, but managers at three Chinese factories were caught on camera admitting to the mislabeling of Lumber Liquidators products so that they could meet proper protocols.

A preliminary earnings statement has revealed Lumber Liquidators’ revenue rose approximately 5.6 percent to $260 million, whereas financial analysts estimated $258.2 million. The full first-quarter results will be released on April 29.

Since the special report aired on March 1, Lumber Liquidators has been forced into the spotlight to defend its flooring products, which the company claims are safe. In order to win back the trust of its customers, the company has also been offering free testing kits and may even end up replacing flooring that tests positive for the dangerous chemical.

Roughly 10,000 Lumber Liquidators customers agreed to receive the testing kits. The report has prompted an investigation by the U.S. Consumer Product Commission (CPSC), as well as many lawsuits.

Exposure to formaldehyde can cause a number of health problems, such as eye, nose and throat irritation, chronic respiratory distress and asthma. Many Lumber Liquidators customers were complaining of these symptoms after having their laminate flooring installed, but it wasn’t until the release of the 60 Minutes report that their claims were substantiated.

While quarterly sales numbers paint a happy picture for Lumber Liquidators, last month’s sales dropped 12.8 percent to $89.4 million.

“Net sales in March 2015 were significantly weaker than trends in January and February, as net sales were negatively impacted by unfavorable allegations surrounding the product quality of the Company’s laminates sourced from China,” said Lumber Liquidators regarding the significant drop in sales.

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