Wednesday, February 24, 2016
Lumber Liquidators’ shares floored on revised CDC report
Lumber Liquidators shares were lower than its flooring Monday, as federal regulators checked their math.
Wall Street reacted to a revised report from the Centers for Disease Control and Prevention by sending the retail company’s stock down by 20 percent to $11.40. The new findings were highlighted in a “60 Minutes” segment on Sunday.
The federal agency found that the health risks associated with some of Lumber Liquidators’ laminate flooring could result in cancer in six to 30 cases per 100,000 people.
Earlier this month, the federal agency had downplayed the cancer risk to two to nine cases, but it admitted last week that it made an error. The CDC said it had used meters instead of feet to calculate ceiling heights, but that the correct calculations make the risk three times greater than it had originally reported on Feb. 10.
The embattled 370-store chain’s shares are off 84 percent in the last 12 months.
“We expect the stock to give up gains from the earlier CDC report,” said Stephens analyst Rick Nelson, who did not lower his Equal Weight rating of the company.
At issue are the unsafe levels of formaldehyde — a carcinogen — in the China-sourced laminate flooring. As a result, consumers can experience eye, nose and throat irritation and “other respiratory issues for people with asthma and COPD,” said the CDC.
Formaldehyde is a colorless, flammable, strong-smelling chemical that is used in building materials and to produce many household products, the National Institutes of Health’s National Cancer Institute explains on its website.
“It is used in pressed-wood products, such as particleboard, plywood and fiberboard, glues and adhesives,” the NCI said. “In addition, formaldehyde is commonly used as an industrial fungicide, germicide and disinfectant, and as a preservative in mortuaries and medical laboratories.”