Lumber Liquidators Holdings shares surged upward after the company came to an agreement to pay the California Air Resources Board $2.5 million to bring an inquiry to an end about its laminate flooring products that were sourced from China.
The company’s stock was up by as much as 16% at one time after the announcement of the settlement was released. Lumber Liquidators has been dogged by the allegations its flooring is not safe. It announced via a prepared statement that this agreement would fully resolve the inquiry by the board.
The board did not find any formal violation or an admission of any wrongdoing by the company, which is headquartered in Toano, Virginia.
Lumber Liquidators watched its sale plummet since a 60 Minutes episode and short sellers accused the company of selling laminated flooring made in China with levels of formaldehyde that could cause cancer.
The company said it has not sold any flooring products that were purchased in China since May of 2015 just shortly after the April 2015 episode of 60 Minutes was broadcast.
The company slashed prices, increased its discounting and attempted to ease the health concerns of its customers by pulling all its laminate from China from its locations.
However, the deterioration of the business increased during last quarter with revenue at its established locations plunging by over 17%.
As part of the agreement with the board on Tuesday, Lumber Liquidators has agreed to implement new procedures that will ensure all the flooring it sources will meet the formaldehyde standards for California, which are the country’s most stringent.
The company is also going to work together with the board to help develop new protocols for testing different flooring.
A spokesperson for the board in California did not return message left on voice mail at the office seeking a comment regarding the accord.
John Presley the CEO at Lumber Liquidators said via a prepared statement, that consumer safety is the company’s top priority and that over the last year the company has implemented many initiatives that are customer focused.