Lumber Liquidators Shares Surge As U.S. Probe Ends

(RTTNews) - Shares of Lumber Liquidators Holdings Inc. (LL) are gaining more than 16 percent on Friday after the U.S. Consumer Product Safety Commission ruled that a full recall of made-in-China laminate wood flooring sold by the company was not necessary.

The CPSC has ended its probe of Lumber Liquidators for selling flooring made in China that contained formaldehyde, a cancer-causing agent.

According to the regulator, Lumber Liquidators has agreed to not resume sales of laminate wood flooring previously imported from China. Any future sale, disposal or transfer of the inventory can only take place with the CPSC's approval.

The CPSC noted that out of an abundance of caution, Lumber Liquidators tested the air quality in more than 17,000 households and retained third-party certified laboratories to conduct formaldehyde emissions tests for about 1,300 of those consumers' floors. However, none of those floors tested for air quality found formaldehyde levels to be above the remediation guideline level.

Lumber Liquidators' image was tarnished after a "60 Minutes" segment aired on CBS in March 2015 found that flooring manufactured in China and sold by the company contained levels of formaldehyde that may not meet health and safety standards of California.

The report triggered a fall in the company's share price and also led to falling sales, lawsuits and the departure of some senior executives.

According to the CPSC, Lumber Liquidators has agreed not to resume sales of inventory of the Chinese-made laminate flooring and will continue conducting a comprehensive voluntary testing program as part of a recall to test. In homes where the Chinese-made laminate flooring is found to emit elevated levels of formaldehyde, Lumber Liquidators will provide required remediation.

About 614,000 consumers nationwide purchased Chinese-made laminate flooring through Lumber Liquidators from 2011 through May 2015. The CPSC is encouraging consumers who purchased the Chinese-made flooring from Lumber Liquidators from February 2012 through May 2015 to request a badge kit and screening test. There is no cost for the kits.

Further, the regulator said that consumers should not remove the Chinese-made laminate flooring installed in their homes by themselves. Instead, they should contact Lumber Liquidators to participate in this testing program.

LL is trading at $15.42, up $2.19 or 16.55 percent on a volume of 2.24 million shares.