Three months after a report alleged Lumber Liquidators sourced flooring laminates with harmful levels of a nown carcinogen, CEO Robert Lynch unexpectedly resigned. Bobbi Rebell reports.
A surprise exit from Lumber Liquidators CEO Robert Lynch. The move just three weeks after the CFO hit the road, sent shares of the company reeling, again. The stock's been under heavy pressure since a 60 Minutes report alleged the flooring manufacturer laminates contained harmful levels of a cancer-causing substance. The company is now under investigation from a several agencies. Reuters' David Gaffen: SOUNDBITE: DAVID GAFFEN, REUTERS MARKET EDITOR (ENGLISH) SAYING: "The thing is that, this is unexpected. This is not somebody who is retiring. He is not saying that he is going to spend more time with his family, as transparent an excuse that that is sometimes. He doesn't have a better job. And the company has been, you know, in a lot of turmoil." Lumber Liquidators suspended sales of all laminate flooring sourced from China this month because of the controversy. Sales had fallen 13 percent in March. The company is also facing increased pressure from bigger rivals, Home Depot and Loew's. Oppenheimer's Brian Nagel: SOUNDBITE: BRIAN NAGEL, SENIOR EQUITY RESEARCH ANALYST, OPPENHEIMER (ENGLISH) SAYING: "I've spent a lot of time in their stores lately. We are seeing a much more promotional or aggressively promotional company, so, I think, again, they are just trying to stay in front of their customers. So, I think, that is key in the near term. Longer term then, it's a matter of keeping sales to the extent that they can. And, ultimately, driving better profits from those sales." But about a third of the company's outstanding shares were on loan for short bets as of Wednesday, according to financial data firm Markit, suggesting investors were expecting more bad news.