Lumber Liquidators’ chief executive officer Robert Lynch ‘unexpectedly’ quit his post this week, following struggles stemming from a March 1 report aired on “60 Minutes” that found toxic levels of formaldehyde in the company’s Chinese-made laminate flooring.
What’s the Problem?
May 21, 2015 – Lynch’s resignation came just weeks after Lumber Liquidators announced that its chief financial officer, Daniel Terrell, would step down in June. The retailer’s shares fell 16% within hours of the news, and more than 30% since the “60 Minutes” report, according to the New York Times.
Lumber Liquidators’ sales have also fallen sharply since April, when it posted a loss of $7.8 million, or 29¢ a diluted share, for the first 3 months of the year. The company currently faces more than 100 lawsuits filed over the formaldehyde content in its Chinese-made floors. Earlier this month, Lumber Liquidators announced that it would suspend sales of the flooring.
In response to the problem, Lumber Liquidators has offered free air testing kits to customers who purchased the suspect flooring; however, while the tests can measure overall levels of formaldehyde in a room, they cannot pinpoint where the chemical is being emitted from.
Mr. Lynch had been Lumber Liquidators’ CEO since 2012. Before he joined the company in 2011, he held top positions at Orchard Supply Hardware and Home Depot. Lumber Liquidators’ founder Thomas Sullivan will serve as acting CEO until a replacement can be found.
Compliance Chief Steps Down
June 3 – Less than 2 weeks after Lumber Liquidators’ CEO Robert Lynch ‘unexpectedly’ resigned, the company’s chief compliance officer Ray Cotton has quit his post. Cotton was criticized in a Seeking Alpha article published yesterday, in which hedge fund analyst Whitney Tilson accused him of lacking experience and not being a “serious person.”
Chief Merchandising Officer Fired
Lumber Liquidators has fired its chief merchandising officer William Schlegel, according to ABC News. Schlegel, whose last day will by Friday, May 19, is the third top-level executive to leave the company amid allegations that it sold Chinese-made laminate flooring hat contained toxic levels of formaldehyde. Click here to learn more.