Home improvement retailer Lumber Liquidators said Thursday morning it is halting sales of all its Chinese laminate flooring effective immediately, confirming a CNBC report overnight. The move comes in the face of dozens of lawsuits over the safety of the products, as well as looming criminal charges disclosed by the company last week concerning its foreign sourcing.
The company said in a statement that it is taking the action in light of "mounting industry concerns relating to laminate products sourced from China."
Lumber Liquidators has been under fire since early March, when the CBS News program "60 Minutes" aired a report saying the Chinese laminate flooring contained high levels of formaldehyde, a known carcinogen.
Whitney Tilson, the prominent money manager who first brought the story to the CBS program, extended his short on the embattled company following Thursday's news. The founder and managing partner of Kase Capital Management told CNBC he "materially" increased his short position this morning, and said shares of the company "should be down 20%" on it pulling Chinese laminate.
The company had insisted the products are safe. But last week, after reporting a surprise quarterly loss as a result of the controversy, CEO Robert Lynch announced the company would scale back its sourcing of laminate flooring from China in response to "customer demand." The new announcement goes further, eliminating the Chinese laminate entirely while a special committee of the board of directors reviews the allegations.