Feb 25 (Reuters) - Lumber Liquidators Holdings Inc, a retailer of hardwood flooring in North America, said the U.S. Department of Justice may seek criminal charges against the company under an Act aimed at curbing illegal harvest of tropical hardwoods.
The company’s shares plunged as much as 24 percent after CEO also said that CBS’s “60 minutes” news program will feature the company in an “unfavorable light with regard to sourcing and product quality, specifically related to laminates.”
“We will vigorously challenge any false allegations or incorrect presentations,” CEO Robert Lynch said on an earnings call with analysts.
Contracts volume in Lumber Liquidators’ options were 9 times normal at about 27,000, according to Trade Alert data.
The investigation by the DOJ relates to the import of certain wood flooring products.
Lumber Liquidators said it does not have enough information “to estimate a reasonably possible loss or range of loss that may result from actions by the DOJ...”
The company, which said it is cooperating with the federal authority, also reported a lower-than-expected fourth-quarter profit, hurt by higher costs and a weak demand.
The company’s shares were down 17 percent at $57.35 in afternoon trade on the New York Stock Exchange. About 732,000 shares were traded, more than 7 times the stock’s 10-day moving average.
The stock has lost 39 percent of its value since Sept. 26, 2013, when federal authorities first issued search warrants against some of the company’s offices. (Reporting by Ankit Ajmera in Bengaluru; Editing by Sriraj Kalluvila)