TOANO, Va. - Lumber Liquidators (LL) is seeing its profits plunge following revelations last year that some of the company's products can increase the risk of getting cancer.
The flooring manufacturer reported Monday that its fourth-quarter loss that was more than three times larger than what expected as fallout over the safety of some of its products continues to rattle the company.
The Centers for Disease Control and Prevention has found that people exposed to certain types of Lumber Liquidators' laminate flooring were three times more likely to get cancer than the agency had previously predicted.
The laminate flooring was sold by Lumber Liquidators until last May, when the company announced it was halting sales. The investigation was prompted by a March 2015 "60 Minutes" report that revealed the company's laminate flooring made in China had higher levels of formaldehyde gas than allowed by law.
Lumber Liquidators agreed to pay more than $13 million earlier this month for illegally importing hardwood flooring after the company pleaded guilty to environmental crimes last year. Lumber Liquidators pleaded guilty to environmental crimes in October.
Formaldehyde is a colorless gas with a pungent smell, used among other things to manufacture building materials and household products. It's a common indoor air pollutant. Researchers say the amount of formaldehyde given off by new products ebbs as time passes.
Formaldehyde levels can vary widely from home to home. But on average, there are less than 50 micrograms of formaldehyde per cubic meter of air, the report said. The analysis found the amount of formaldehyde released by the new flooring could increase that level by as much as another 930 micrograms -- an 18-fold increase.
Such levels can cause nose and throat irritation for many people. For asthmatic children, it can increase the chances that breathing problems will require hospitalization.
For the period ended Dec. 31, the hardwood flooring retailer lost $19.8 million, or 73 cents per share, which far exceeded the per-share loss of 23 cents that Wall Street had expected, according to a survey by Zacks Investment Research. The company last year earned $17.3 million, or 64 cents per share, during the same quarter.
Revenue came in at $234.8 million, also well below the $254.5 million analysts were expecting.
Sales at stores open at least a year dropped 17.2 percent. That's key gauge of a retailer's health because it excludes the volatility associated with locations recently opened or closed.
The Toano, Virginia, company said Monday it believes sales continue to be hurt by questions about the quality of products imported from China.
For the full year, Lumber Liquidators Holdings Inc. lost $2.08 per share on revenue of $978.8 million.
The company also announced that Dennis Knowles will serves as chief operating officer, effective Tuesday. He will be responsible for the organization of Lumber Liquidators' stores and related operations. Knowles recently served as chief store operations officer at Lowe's Cos.
CEO Robert Lynch resigned in May and late last year, the company named Thomas Sullivan, as acting CEO
Lumber Liquidators shares have declined 36 percent since the beginning of the year. The stock has dropped 79 percent in the last 12 months.