Lumber Liquidators (NYSE:LL) is one of the largest specialty retailers of hardwood flooring in the United States running a total of close to 300 retail stores in 46 states. Its product is found to contain illegal levels of formaldehyde -a known carcinogen.
Lumber Liquidators reported net revenue of $813 million and $47 million in net income for the year 2012. At $82 a share, the stock trades at around 50x its 2012 earnings. This stock is the definition of a high flier: trading at over 50x fiscal year 2012 earnings, amazing for a building material retailer. The rationale for this huge multiple is twofold:
1) Huge gross and net margins, despite selling a commodity product
2) An aggressive growth plan to double the number of retail outlets
At the current level, Lumber Liquidators presents a compelling short opportunity for investors for reasons beyond its egregious valuation. This report shows that Lumber Liquidators lacks a proper product quality control system and its products may be hazardous to the unsuspecting consumers. Given the issues presented, Lumber Liquidators faces significant risks in executing its business plans. The margin expansion may reverse when additional quality control processes are put in place. Further, enormous risks are present for the Company may be required to recall its noncompliant products sold. Investors in Lumber Liquidators are likely unaware or unfamiliar with the significance of selling noncompliant composite wood products to consumers. The stock may experience significant decline if the Company were to be forced to recall its products. Moreover, sell-side estimate will become unreliable should consumers abandon Lumber Liquidators for health and safety concerns.
The Company's stock has been on a tear, rallying 300% over the last year, primarily on dramatic expansion of its gross and net margins. Management has often made reference to the significance of its acquisition of Sequoia Floorings Inc., based in Shanghai, as a primary reason for the tremendous improvement in margins. Sourcing product in China is certainly hardly unknown to competitors, and skeptics have wondered how an $8 million acquisition could have such a dramatic effect on gross margin and bottom line, and more importantly, enable Lumber Liquidators to undercut fierce price competitors such as Home Depot (NYSE:HD) and Lowe's (NYSE:LOW).
That piqued my curiosity, but nothing improper was found about the acquisition of Sequoia itself. I then directed the investigation towards the quality of flooring sold by Lumber Liquidators that is imported from China. And that is where we found the problem being reported today.
While a darling for its investors, Lumber Liquidators is among the lowest rated flooring retailers according to Resellers Review. Quality issues such as durability abound for customers who purchased flooring products from Lumber Liquidators. Few, however, would think their health and well-being are also in danger when they put in flooring products from Lumber Liquidators. The issue concerns the Company's quality control process on formaldehyde emission standards when it imports engineered and laminated wood flooring products from countries such as China. While the Company boasts strict compliance with CARB Phase II, my research uncovers product sold by the Company to consumers in the state of California that is in gross violation of the emission standards set forth by the California Air Resources Board. Such a violation does not only apply in the state of California. On May 29th, 2013, the U.S. Environmental Protection Agency (EPA) took the first step to implement the Formaldehyde Standards for Composite Wood Products Act signed into law by President Obama in 2010. Those standards are identical to the emission standards established by the California Air Resources Board.
Investors in Lumber Liquidators have been riding on a housing boom backed by the Company's efforts to expand its gross margin through more efficient sourcing initiatives in China. In 2011, Lumber Liquidators purchased certain assets of Sequoia Flooring Inc. in China and has since experienced significant margin expansion. Its gross margin improved from 34.8% in the year 2010 to 40.4% in the first quarter of 2013. Lumber Liquidators attributes its gross margin expansion to its efficient Chinese sourcing operation. But does the efficiency come at the cost of product quality and safety?
Lumber Liquidators Holdings, Inc. (Lumber Liquidators) is a retailer of hardwood flooring, and hardwood flooring enhancements and accessories. The Company offers an assortment of wood flooring, which includes prefinished domestic and exotic hardwoods, engineered hardwoods, unfinished hardwoods, bamboo, cork and laminates, as well as resilient flooring. Its hardwood flooring products are available in various widths and lengths. It offers approximately 350 different flooring product stock-keeping units.
Lumber Liquidators has come a long way since the housing bust. Over the past year alone, LL's stock price almost tripled, boasting a valuation of over $2.4 billion. With the market blindly investing in all stocks housing related, investors in Lumber Liquidators ignored critical questions about the true source of the Company's margin expansion. Among flooring retailers, Lumber Liquidators has a reputation of being able to offer customers the lowest priced products. According to conversations with the sales representative at a Lumber Liquidators retail store, the prices offered at Lumber Liquidators for comparable products are often $1 or more cheaper than those at Home Depot or Lowe's on a per square footage basis. Despite the ultra-low price it charges consumers, Lumber Liquidators has managed to achieve a gross margin of over 40% in the first quarter of 2013. The management's assertion that margin expansion all came from direct sourcing efforts in China should raise concerns for investors. Is the Company sacrificing quality to achieve such margins; if so, will the quality issues turn into safety issues and trip up the Company with the regulators. Further, what kind of brand image impact may ensue when consumers became aware the flooring products from Lumber Liquidators may in fact be emitting carcinogenic chemicals beyond the limit mandated by the government?
Formaldehyde Scare in China
A&W, Anxin Weiguang Flooring, was a leading hardwood flooring company in China until February of 2012 when a consumer advocate broke the news on the Internet that A&W branded engineered hardwood flooring products do not meet regulatory formaldehyde emission standards. For investors who are unfamiliar with formaldehyde, it is listed as a known carcinogen in June of 2011 by the National Toxicology Program. In addition to being a known human carcinogen, formaldehyde is also shown to cause childhood asthma and female reproductive issues. A&W is a major Chinese flooring company counting Carlyle as one of its investors. Media nicknamed the issue "toxic flooring gate" and drew an incredible amount of attention from consumers. Among the allegations, the advocate detailed A&W branded engineered hardwood flooring products used in certain condominiums developments significantly exceed the regulatory limits and such flooring products were sourced directly from A&W. The issue turned into a major controversy forcing China Vanke, the largest residential real estate developer in China, to re-test all the flooring products sourced from A&W. After comprehensive testing of the flooring products in question, Vanke identified at least one of its developments where the formaldehyde emission level of the flooring products was noncompliant. The incident caused significant public concerns and subsequently, A&W experienced a drastic sales slump and almost went bankrupt as a result of the incident. In addition to supplying products to real estate developers in China, companies such as A&W also export flooring products to the United States. Per relevant regulations, the importers bear the responsibility of ensuring the safety of their imports. Does Lumber Liquidators have proper assurance procedures in place to ensure products installed in people's homes in the U.S. meet the formaldehyde emission standards set forth by relevant regulatory bodies?
Consumer Reviews Spell Troubles
Lumber Liquidators' management has successfully executed its planned store expansion and growth strategy in addition to the noted gross margin expansion, yet investors also assumed its future expansion and marketing strategies will be smoothly executed. For the optimistic investors, universally negative consumer reviews should serve as an alarm bell.
According to 63 reviews posted on the website Reseller Reviews, on a 10-point scale, Lumber Liquidators scored a miserable 3.61 on pricing and service while another local reseller scored 9.62. The bull argument so far seems to be that consumer opinions do not matter; granted, Lumber Liquidators has managed to grow its same-store sales and achieve significant margin expansion over the past year with all the negativity. The continuation of its success is hardly guaranteed. When consumers learn they may have rested on the empty promises of the Company to ensure the environmental safety of their homes, their reactions could be much more draconic. If the Chinese flooring company, A&W, were of any guidance, putting consumers' health at risk in exchange for margin expansion can hardly be a sound business strategy.
As noted before, Lumber Liquidators is no stranger to negative consumer reviews. A significant number of consumer reviews seem to focus on the observable factors such as the planks are not the same width across their length or the products are not durable enough. In a number of consumer reviews, the consumer noted the weird odor they smell after installing Lumber Liquidators' products in their homes. The majority of U.S. consumers do not seem to be well-versed in the role of formaldehyde in engineered flooring products and the significant health risks that come with prolonged excessive exposure. However, a number of complaints hint at the issue at large. In a note posted on Complaints Board, Tommy detailed a miserable experience he had with Lumber Liquidators in 2011:
"We bought 1600sf Bellawood floor from Lumber Liquidators and installed it in our house. Right after the installation, my family started suffering irritated eyes, skin rash, and burning throat, respiratory stress. Indoor air testing showed the formaldehyde level was above 0.2ppm, which is 25 time higher than the normal level (0.008ppm). We have to move to other place to avoid exposure. The Lumber Liquidators and their insurance company Liberty Mutual kicked the ball back and forth, and made us a homeless for 8 months. I would like to tell other customers of Lumber Liquidators, if you are suffering some respiratory symptoms, check the Formaldehyde level in your house. If you are going to buy products from Lumber Liquidator, please think about my experience."
Another note posted by Max77054:
"We installed 16oo sf bella wood floor in my house in 2009. Right after the installation, all of my family members started to have allergic reactions, headache, dry eyes, burning throat, skin rash, etc. We did indoor air pollution analysis, and found a high concentration of formaldehyde (25 times higher than it should be) in my house. Wood floor material analysis found it contains a large amount of formaldehyde in the top finish of the bellawood floor. Please contact me if you have the same experience. 713-829-2172."
While most consumers did not bother to understand what the weird smell is, others went the extra step to test the indoor Formaldehyde level after installing Lumber Liquidators products. They certainly are not alone when it comes to having formaldehyde issues with Lumber Liquidators' products. In another note posted on Floormasters.com, a site dedicated for wood flooring professionals, one installer expressed his concerns regarding Lumber Liquidators' product quality:
"Just bid 800 sqft install. Customer found some Strand Bamboo at LL and loves the color and grain. I'm hesitant to install any Strand Bamboo for several reasons: Dimpling where there are cleats, instability, cracking tongues, and the finish is very sensitive to moisture. Obviously the price of $3.60/ sqft is appealing to the customer, but I've read many reviews stating that LL uses a specific type of Formaldehyde that gases off and causes odor issues and medical issues if you have a sensitivity to it. I think that I will be able to persuade them into a exotic that will be happy with, but with a new LL in town, I think this will become more frequent. I have installed a couple Bellawood floors and thought they were ok, not great, but with such a lack of quality control, I am seriously considering not installing any LL products. I always try to educate the customers, but price can be a difficult obstacle to overcome. How do you all approach customers when LL is considered? Have many of you installed their Strand Bamboo before?"
The flooring professional noted "many reviews" stating Lumber Liquidators products cause odor issues and medical issues. With a significant price discount to its peers, Lumber Liquidators understandably may appeal to certain consumers who care less about durability or overall quality of their flooring, but they certainly did not sign up to purchase products that will emit excessive level of a known carcinogenic toxic chemical for many years to come. The substantial health risks associated with prolonged exposure cannot be quantified in monetary terms.
Stated Product Compliance and Regulatory Environment
Lumber Liquidators officially states that all of its products are CARB compliant. In fact, labeling on the boxes of its flooring products clearly states the product is California 93120 Phase 2 compliant for Formaldehyde in plywood. Also, Lumber Liquidators' representative stated the following on the Q&A section of its own website:
"Q: Does this product use urea formaldehyde and does it have low or no VOC?
Asked on 12/2/2012 by Aimee from Houston, TX
A: The adhesive that is used in bonding our Bamboo, Cork, Engineered, and Laminate flooring products contain very low amounts of Urea Formaldehyde. We feel that our products are very safe and most meet California CARB Phase I or California Phase II regulations, which is listed on the boxes. We also list MSDS sheets for most of these products on the Lumber Liquidators website "Flooring 101."
Answered on 12/10/2012 by cc-2"
Significant amounts of governmental regulations pertain to the use of formaldehyde in composite wood products such as engineered or laminated flooring products. The state of California pioneered the Airborne Toxic Control Measure (OTC:ATCM), which applies to all composite wood products sold in the state of California. In 2010, President Obama signed the Formaldehyde Standards for Composite Wood Products Act into law. The emission standards contained in EPA's proposed implementation are identical to the CARB regulations.
Specifically, the California Air Resources Board requires formaldehyde emission standard compliance from distributors and importers. Lumber Liquidators is certainly subject to CARB regulations.
Compliance Schedule and Emission Standard:
Specifically, CARB dictates that all HWPW (Hardwood Plywood) products sold in the state of California should emit no more than 0.05 ppm (parts per million) as determined per relevant testing methods. Violations of CARB regulations may result in severe penalties assessed against the offending entities. A general overview of the relevant CARB regulations can be found here.
Enforcement against Noncompliance
Lab Testing Shows Lumber Liquidators Lacks Effective Product Quality Control
I recently conducted independent lab testing - engaging Berkeley Analytical, an IAS accredited testing laboratory -- on a sample of Lumber Liquidators house brand flooring ("Mayflower" brand), and the results that came back weren't pretty: Over 3.5x the maximum legal level for formaldehyde. (This product was purchased retail from a Southern California retail store.) Fully understanding the importance of this finding, we submitted samples from the same package to a second laboratory, this one the "gold standard" lab for the National Wood Flooring Association, NTA. This second lab confirms the product is in violation of the legal limit for formaldehyde.
Lumber Liquidators officially states its products are CARB compliant despite all the negative consumer reviews. It is naturally suspicious due to the apparent disconnect between those concerning consumer reviews and the Company's position on its product quality. To investigate, some products were purchased from a retail store in Los Angeles and were sent for lab testing for CARB compliance. Due to the prohibitive costs and efforts in carrying out the testing, only a limited number of samples were collected. The testing specifically focused on the Company's brand name Bellawood and the Company's imported product from China. While the Bellawood product came back compliant with the relevant regulations, the imported product from China tested emitting 0.17 ppm, three and half times the government mandated maximum emission level. The test was carried out by Berkeley Analytical, an IAS accredited lab. The same test performed by another independent accredited lab, NTA, also shows noncompliance.
The results show some of Lumber Liquidators' products significantly exceed the government mandated limits and the Company does not have proper internal quality control process to ensure the safety of its products. The tested product, Mayflower 5/16" x 5" Bund Birch Engineered, emits a staggering three and half times over the government mandated maximum emission level. The product is clearly not CARB compliant yet Lumber Liquidators tagged CARB compliance on the box. As retailer and importer of this product, Lumber Liquidators is strictly liable for the violation per ATCM. It is unclear how many types or batches of Lumber Liquidators' products are noncompliant but certified as compliant. The gross violation of the one product tested shows a clear lack to product quality control process. With the rampant negative consumer reviews, it is very likely a material portion of Lumber Liquidators' 210 million USD inventory could be noncompliant and they should be re-tested and properly certified before being sold to any consumer. Further, reading prior reviews submitted by other consumers referenced above, Lumber Liquidators appears to be no stranger to the issue of formaldehyde. Instead of taking drastic actions to ensure product quality and preventing toxic products from entering people's homes, noncompliant product is still being sold today by Lumber Liquidators. The Company appears to be willfully violating regulations in an egregious fashion.
Regulatory and Legal Consequences of Violations
Arguably, should the formaldehyde issue gain traction with consumers, the consumer market itself should cause grave economic consequences for Lumber Liquidators. Just like with A&W, consumers will simply walk away and purchase products from better brands such as Home Depot and Lowe's. Yet as a U.S. Company, Lumber Liquidators could face additional consequences beyond abandonment by consumers. Prior enforcement action and class action lawsuits related to formaldehyde suggest the Company could be on the hook for significant class action settlements and government enforcement actions. It will likely be required to recall all problematic products sold to consumers, which would be prohibitively expensive for a flooring company. Further, Lumber Liquidators will need to conduct a comprehensive review of its inventory to assess the extent of its noncompliance. At the end of first quarter 2013, Lumber Liquidators has a total cash balance of $72 million. With significant overhead running coupled with legal consequences, if the Company were to face mass consumer exodus due to a lack of confidence in the safety of its products, bankruptcy is not an inconceivable scenario.
"Stationary Sources and Consumer Products (Part 4 of Division 26, HSC)
There are civil penalties (sections 42401 through 42403) and criminal penalties (sections 42400 through 42400.8). Violators may be punished using either, but not both (section 42400.7). Most violations are punished civilly. Maximum penalty amounts are based on the degree of a violator's intent. The range begins at $1,000 per violation per day, which can be imposed with no finding of intent (strict liability). Penalties top at $1 million per violation per day for corporate violators and $250,000 per violation per day for individuals, in cases of willful and intentional emissions of air contaminants that result in great bodily harm or death. ARB also can obtain a court order or "injunction" to stop violations from taking place (section 41513). In criminal cases, violators also face possible jail sentences of 30 days to 1 year per violation per day.
Part 4 penalty provisions also apply to violations of ARB's consumer products regulations (Title 17, California Code of Regulations, sections 94500-94575), and indoor air cleaner regulations (sections 94800-94810). The list of factors that must be considered in determining a penalty under Part 4 (section 42403) is similar to those required under SB 1402 (section 43024)."
Investors should also pay close attention to two formaldehyde related class-action lawsuits and enforcement actions.
The California Air Resources Board took enforcement action on a hair product. In the settlement related to the suit, Brazilian Blowout Products was required to refund all products sold. The number comes out to be roughly $4.5 million for the company. It is difficult to assess the amount of damage should Lumber Liquidators be involved in such a suit. The penalty will definitely depend upon the length of time over which Lumber Liquidators was non-compliant, but it seems reasonable the Company could be liable for the full value of whatever revenue it received from selling the noncompliant flooring products, at a minimum.
"In a class action suit, 10 plaintiffs in March negotiated a preliminary $4 million settlement with GIB, which includes payments to consumers of $35 an application, with a limit of three, and a $75 reimbursement per bottle to stylists. The plaintiffs estimate that over the years up until December, about 15,700 U.S. stylists had purchased Brazilian Blowout directly from GIB and about 100,000 customers had paid for the treatment. The settlement also proposes to resolve a pending federal class action suit."
Another similar class action lawsuit relates to excessive formaldehyde emission from trailers provided for hurricane victims. The lawsuit was settled for over $30 million.
The "cause for action" are fraud, negligence, and false advertising. The lawsuit was brought in a federal district court, with the plaintiffs from all over the U.S.
It is impossible for an investigator such as me to fully assess the impacts of Lumber Liquidators' vulnerabilities to its business from this finding. How many brands and SKUs show formaldehyde contamination. How long has such product been distributed in the U.S.? (all US product is distributed from a single point of supply, so it is highly unlikely that my finding is isolated.) In addition to the sky-high valuation, investors in Lumber Liquidators should be aware of the following risks facing the Company.
- Amount of installed product in customers' homes and businesses to be removed and replaced -- unknown
- Amount of product to be withdrawn from inventory -- disposition and costs unknown
- Litigation liability for misrepresentation, financial and health damages -- likely through consumer class action -- impacts unquantifiable
- Shareholder lawsuits against management for gross misrepresentation -- damages unknown
- Regulatory fines and costs for misrepresented products -- damages unknown
- Reputation damage -- impossible to quantify -- lower revenues, tarnished brand
- Growth plans -- likely suspension for a significant period
- Margin contraction -- likely lowered due to removal from sales mix of low-cost, high-margin substandard Chinese products
Note from Grant's Interest Rate Observer on Lumber Liquidators
The proposed short thesis above does not deal with the valuation of the Company. Therefore, it is probably helpful for investors to get the perspective from a leading financial publication. Grant's is an independent, value-oriented and contrary-minded journal of financial markets edited by Jim Grant. It boasts unparalleled reputation among institutional investors and Lumber Liquidators was featured as a short idea last month when the stock was trading at $87 a share.
"Idea No.3 is a short position in Lumber Liquidators Holdings (LL on the Big Board), the biggest specialty retailer of hardwood flooring in North America. Let us first acknowledge that we are picking on a marketing juggernaut and a stock-price momentum rocket ship. Sales and earnings per share are on a roll, and operating margins have been widening-to 11% in the first quarter of 2013 from 7.1% in the like period of 2012. The balance sheet shows $72.7 million in net cash. Hustling to stay bullish enough, sell-side analysts are ratcheting up their price targets even as the latest S&P/Case-Shiller Home Price Index, for February, shows a 9.3% year-over-year gain, the most since May 2006. In short, here is an apparent state of perfection. But only apparent: "The bullish Lumber Liquidators' story revolves around the potential opportunity for the company to open 600 stores in the United States over the next couple of years and to take market share from independent floor-covering retailers," Peligal relates. "Lumber Liquidators owns a 10.5% market share, management estimates. Other contenders in the American hardwood and laminate market are home centers like Home Depot and Lowe's, with a combined share of 27%, and everybody else with 62%.
While one can understand the bullish thesis, it's interesting to note that LL's sales per store are flattish over the past couple of years. "Now it's true," Peligal continues, "that new stores cannibalize old stores, but let's make the generous assumption that a mature LL store can generate $3.5 million of revenues per year. Furthermore, assume LL can open a total of 600 stores, and that total revenue at some point in the future will be $2.1 billion (600 stores times $3.5 million per store). Say, in addition, that LL can take share from independent retailers and that operating margin climbs to 14%. You would then have $294 million in earnings before interest and taxes ($2.1 billion in future revenues times a 14% margin). Because, at this indeterminate point in the future, LL will have become a mature retail concept, apply a multiple of 14. You get about $2.6 billion of value, or perhaps $2.4 billion, as the stores don't just build themselves.
And that is essentially where the stock is valued today. If you put any kind of discount rate on it, the share price would immediately sink, because it might take six or eight years to finish the construction. Thus, at these levels, LL is a different kind of lottery ticket. In a way, you're buying a low-cost put on housing. If a surprise outbreak of inflation pushed up mortgage rates, or a surprise outbreak of deflation pushed down house prices, the price of a share of LL could come down from the ceiling to a spot much nearer the floor." Peligal got on the phone to check with some of the independent flooring retailers on whose market share Lumber Liquidators will ostensibly feast. "What is their name?" a New Jersey merchant rhetorically asked in reply to Peligal's question. "Lumber Liquidators," he answered himself." You know what liquidators means? It's the stuff nobody else wants." The man from the Garden State asked to remain anonymous. So did a retailer from Maryland. "I'm the general manager of this company, and I've been in the industry for 26 years now," our informant said. "The reputation of Lumber Liquidators is that they are the dumpster of the industry." The author of a Yelp review of the Lumber Liquidators' store on E 1st St. in Manhattan, dated Dec.10, 2012, was only one-half anonymous. "The wood that they sell you is of poor quality, even if it's Bellawood hardwood," wrote Sarah F. "The planks are not the same width across their length, and they are not durable at all. I've had my floor for less than six months and it looks awful already." The Web site Reseller Ratings posts 63 customer reviews of Lumber Liquidators. On a 10-point scale, LL scores 3.61 for pricing and services, 0.63 for shipping and packaging and 0.56 for customer service. "Save yourself a major headache by running as quickly [as possible] in the other direction as if your hair was on fire!" writes customer Kate Olen, of Kissimmee, Fla. Evidence that not every single Internet commentator is angry are the reviews posted on Reseller Ratings for True Hardwoods of Calhoun, Ga. Here, the scores run 9.62 for product and service 9.81 for shipping and packaging and a perfect 10 for customer service; 39 customers contributed. Reached for comment, the LL investor-relations contact replied that the majority of her company's products are first quality, with odd lots and second quality goods accounting for only 5% of volume. As for hardwood, she said, it's a natural product, and people have unreasonably high expectations about the uniformity of the wood. "Well," she explains, "that's how the trees grow."
Notably, the short sellers in LL are not the only sellers. Thomas Sullivan, founder and chairman of Lumber Liquidators, has been a consistent seller over the past two years, including 200,000 shares between May 3 and May 6 at prices in the low $80s (which leaves him 708,998 shares). Follow the leader, we say."
As described in Grant, investors in Lumber Liquidators today are certainly ignoring all the conventional valuation metrics. The discount rate or total addressable market certainly does not come into investors' minds. However, investors should not overlook the issue surrounding Lumber Liquidators' product quality; especially when the quality issue extends into the safety and well-being of Lumber Liquidators' customers.
To be completely candid about what this analysis is and what it isn't. It isn't my job to be the company's quality control department. One seriously non-compliant batch of product was found in a total of three samples of the Chinese imports, and verified the result at two independent labs with top credentials. What does it mean? Could this be a near-meaningless oversight or could it be "the floater in the punchbowl"?
It might not be dissimilar to the China Vanke situation, where only a small minority of the installed wood products were contaminated, yet the consequences were widespread.
The company sold approximately 200,000,000 square feet of product last year. If 10% is contaminated, that would be over 20,000,000 square feet of product producing toxic outgas into US homes and businesses, maybe 250,000 rooms. If even 10% of that amount, say one sample in a hundred, is contaminated, that's still 2 million square feet of contaminated product, maybe 20,000 rooms worth. I have no idea.
The company's response to this report will tell the investing public a lot more about Lumber Liquidators than this Seeking Alpha article. If the company launches a major, highly transparent campaign to acknowledge the problem, do the right thing, retest and recall all contaminated product, redouble its efforts to insure the safety and quality of its products, and stand behind all contaminated product sold to the public, that will tell you something. If they attack the messenger, it will tell you something else. I stand ready to supply the company with the remaining product we tested and copies of the lab results.
Attached here is an open letter sent to the chairman of California Air Resources Board. The product quality issues at Lumber Liquidators warrant immediate regulatory attention and further consumer scrutiny. The U.S. consumers should not unknowingly live in an environment with excessive formaldehyde exposure given the regulatory structures are already in place.
Disclosure: I am short LL. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.