May 21, 2015 2:12 PM by News Staff
Lumber Liquidators (LL) said Thursday that CEO Robert Lynch is stepping down.
Lynch's surprise exit from the flooring retailer follows a plunge in the company's financial performance triggered by a March report by CBS news show "60 Minutes" that found some of the Chinese-made laminate flooring sold at its store violated health and safety standards regarding the use of formaldehyde, a cancer-causing chemical.
Lynch will also give up his seat on the company's board of directors. Lumber Liquidators founder Thomas Sullivan will temporarily take over as chief executive while the company searches for a new CEO. The company's lead independent director, John Presley, has been appointed as non-executive chairman of the board.
Lynch had sought to stem concerns about Lumber Liquidator's flooring following the "60 Minutes" broadcast, initially insisting that it complied with U.S. health regulations. But in May the retailer pulled Chinese-manufactured products from its stores.
Lumber Liquidators shares have fallen roughly 38 percent since the program aired, with sales declining amid concerns among customers. On Thursday the stock sank an additional 16 percent, to a 52-week low of $21.08, just after the start of trading.
The U.S. Justice Department is also pursuing potential criminal charges against Lumber Liquidators, while the company faces more than 100 class-action lawsuits relating to the Chinese laminate flooring. At high levels, formaldehyde can cause myeloid leukemia and nasopharyngeal cancer, while lower levels can cause eye, nose and throat irritation.
Lumber Liquidators is offering testing kits to customers who had installed Chinese-made laminate flooring in their homes. About 26,000 testing kids were sent to 15,000 customers, the company said earlier this month. More than 97 percent of the tests showed formaldehyde levels the fell below World Health Organization guidelines, according to Lumber Liquidators. The chain has also said that if necessary it would replace flooring.
Lumber Liquidators, with a market capitalization of $684.3 million, is the largest specialty retailer of hardwood flooring in the U.S, with roughly 355 locations.
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