Website Says Some LL Products Don't Meet CARB

New York, NY, June 24, 2013 -- Online investment website Seeking Alpha is reporting that some products sold by Lumber Liquidators have over three times the maximum legal level for formaldehyde.

The website said a test was performed by Berkeley Analytical on a sample of house brand flooring called Mayflower. The product was allegedly purchased from a Southern California store and was produced in China.

"Fully understanding the importance of this finding, we submitted samples from the same package to a second laboratory, this one the "gold standard" lab for the National Wood Flooring Association, NTA. This second lab confirms the product is in violation of the legal limit for formaldehyde," according to the Seeking Alpha story.

The story notes that Lumber Liquidators says that all its products are CARB compliant and that the product is tagged as CARB compliant.

"It is unclear how many types or batches of Lumber Liquidators' products are noncompliant but certified as compliant. The gross violation of the one product tested shows a clear lack to product quality control process. With the rampant negative consumer reviews, it is very likely a material portion of Lumber Liquidators' $ 210 million inventory could be noncompliant," Seeking Alpha said.

Results of the testing can be seen on the Seeking Alpha website.

Flooring analyst John Baugh of Stifel Nicolaus noted that "We have read Seeking Alpha pieces before on stocks we cover and find their conclusions and insights frequently misguided. We are not saying that Lumber Liquidators may not have sold “tainted product” and it will certainly have to carefully manage through this process if this is the case."

He also said that Lumber Liquidators is aware of this product batch and has sent the material off for its own testing.