By Ankit Ajmera
Lumber Liquidators (LL), facing U.S. government probes over claims of dangerous levels of a cancer-causing substance in its flooring products, stood by the safety of its products and said it would offer free indoor air quality testing for qualifying customers.
The hardwood flooring retailer’s stock was up 4.5 percent at $ 34.20 in volatile premarket trading Thursday.
The stock had halved since Feb. 25 when the company said CBS’s “60 Minutes” show would portray Lumber Liquidators in an “unfavorable light with regard to sourcing and product quality.”
The CBS show, aired on March 1, alleged Lumber Liquidators’ flooring had higher-than-permitted levels of formaldehyde, a known carcinogen.
Customers would get the same quality testing kits used in workplaces and the tests would be carried out by a third party, the retailer said Thursday in slides slated to be used later on a conference call to assuage investors’ concerns.
The company promised additional tests if the results from home tests were above accepted thresholds.
The retailer also said it has sufficient liquidity to fund its operations “for the foreseeable future.”
The company said it plans to boost marketing spend and adjust retail prices to show “that Lumber Liquidators has the best value proposition in the industry.”
“Maintaining customer trust within a long term relationship is our most important goal,” the company said.
Lumber Liquidators said total net sales fell 7.5 percent in the nine days after the show, compared with a 18.7 percent rise in sales in January and February.
Comparable store sales fell 12.7 percent in the nine days, compared with a 9.6 percent rise in first two months of the year.
The company, however, said it was unable to currently forecast sales or profitability for the full year. The company had earlier forecast profit of $ 2.50 to $ 3 a share on sales of $ 1.14 billion to $ 1.21 billion.