* Lumber Liquidators offices searched by federal agents
* Feds looking at importation of wood flooring products
* Shares down 9 percent
(Adds analyst comments, details on scene, updates stock
Sept 27 Lumber Liquidators Holdings said
on Friday it is cooperating with authorities after federal
agents raided its headquarters and another office in a probe of
imports of wood flooring products.
The retailer's shares were down 9 percent at $102.87 in
midday trading. The shares posted even steeper declines in
premarket trading after the raids, conducted on Thursday, were
reported by the Associated Press.
Special agents from Immigration and Customs Enforcement's
Homeland Security Investigations, the Fish and Wildlife Service
and the Department of Justice executed search warrants at Lumber
Liquidators' headquarters in Toano, Virginia, and a company
office in Richmond, Virginia, said ICE spokesman Brandon
"The warrants are sealed and no further details are
available at this time of the investigation," Montgomery said.
When asked what the agents seized during the raids,
Montgomery said, "To my knowledge, ICE did not remove any
product from the locations."
On Friday, WAVY-TV in Norfolk, Virginia, showed video of
Lumber Liquidators employees stopping every car pulling up to
the Toano headquarters, asking the drivers why they were there.
Lumber Liquidators, which sells hardwood flooring at more
than 305 stores in the United States and Canada, said in a
statement, "The company takes its sourcing and compliance very
seriously, and is cooperating with authorities to provide them
with requested information."
It did not specify what information was being sought, and
the company could not be reached for further comment.
It said it is subject to a range of international and
domestic regulations, which it did not name. It said it sources
its products from about 110 domestic and international mills and
has policies and procedures designed to comply with regulations,
with more than 60 people performing and monitoring its
compliance and regulatory work.
The U.S. Fish and Wildlife Service is charged with enforcing
the provisions of the Lacey Act, which aims to curb trafficking
in wildlife, fish and plant products, including illegally
Height Securities LLC analyst Andrew Parmentier said in a
note, "Ultimately, the fines related to potential violations are
somewhat limited based on our interpretation of the Lacey Act
... though (Lumber Liquidators') business may sustain broader
damage from costs related to prolonged investigations and
potential forfeiture of illegally obtained products."
SunTrust Robinson Humphrey analyst David Magee said the
situation reminded him of a wood-related investigation at Gibson
Gibson agreed to pay a $300,000 fine last year to avoid
criminal charges after allegations that it illegally bought and
imported ebony wood from Madagascar and rosewood and ebony from
India, in violation of the Lacey Act. Federal agents raided
Gibson facilities and seized rosewood, ebony and finished
guitars in 2009 and 2011.
Magee, who has a "neutral" rating on Lumber Liquidators,
said the stock was vulnerable as it has already doubled in price
this year. The shares hit a new high of $115.59 on Sept. 19.
Still, he said the company's business trends "are likely
The Fish and Wildlife Service did not immediately respond to
a request for comment.
(Reporting by Jessica Wohl in Chicago, Deborah Charles in
Washington and Gary Robertson in Richmond, Virginia; Editing by