For Lumber Liquidators, a ‘60 Minutes’ Moment

Lumber Liquidators executives were braced for the "60 Minutes" episode. They had warned investors before the March 1 airing that an “unfavorable light” was going to shine on their business with regard to sourcing and product quality.



How bad was the impact? The company’s shares tumbled on March 2, down more than 25%, with more bleeding the following day.



The segment highlighted the retailer’s alleged practice of using Chinese-manufactured laminate flooring containing high levels of formaldehyde, violating United States health and safety codes. Undercover reporters were shown talking to factory managers who bluntly said certain flooring products did not meet U.S. regulations.



Lumber Liquidators released a defiant statement defending its practices. “These attacks are driven by a small group of short-selling investors who are working together for the sole purpose of making money by lowering our stock price,” the statement reads in part.



Indeed, the episode relied heavily on the comments of a short seller. But it also included a gotcha moment with Anderson Cooper showing to Lumber Liquidator chairman Tom Sullivan a video from inside a Chinese mill. The segment ended on the following exchange:



Cooper: “It certainly calls into question not just these mills, but it calls into question your oversight of these mills.”



Sullivan: “It could, yes.”