TOANO, VA - Lumber Liquidator's net income was down 17%, in the fourth quarter compared to 2013, amid reports that the company may face criminal charges for Lacey Act violations. Net income was $17.3 million, with a lower-than-expected 5.4% rise in revenue. Same-store sales were down 4.2%.
In SEC filings released Feb. 25, the company said it expects to face criminal charges by the Department of Justice for allegedly importing illegally harvested wood, a violation under the Lacey Act. "We expect to continue to communicate with the DOJ regarding its intentions and possible courses of
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action in this matter," Lumber Liquidators said in the filing. "At this time, we do not have enough information to estimate a reasonably possible loss or range of loss that may result from actions by the DOJ as a result of its investigation."
Lumber Liquidators has been under scrutiny since 2013 when the 64-page report, "Liquidating the Forest" by the London-based Environmental Investigation Agency, alleged the company's Chinese wood suppliers of using illegally harvested Siberian lumber in the manufacture of its hardwood flooring. That report may have prompted the Sept. 26, 2013, raid of Lumber Liquidators' Toano, VA, headquarters and a retail outlet in Richmond, VA, by Immigration and Customs Enforcement and Homeland Security Investigations.
During a conference call on Wednesday, Lumber Liquidators CEO Robert Lynch also acknowledged that an upcoming "60 Minutes" report on the flooring manufacturer and retailer would likely be unfavorable. The CBS show will reportedly focus on a number of issues facing the company, including the California lawsuit that alleged Chinese flooring sold by Lumber Liquidators emits formaldehyde at levels far above those permissible under CARB.
“We’ve been dealing with some of these allegations for a couple of years now going back to 2012 and 2013,” said CFO Daniel Terrell. “What I’d tell you very confidently and clearly is that we are a leader in safety.”
The company expects to be charged with a misdemeanor or felony in connection with the case, Daniel Terrell, the chief financial officer, said on the conference call.
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