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Lumber Liquidators under scrutiny again over formaldehyde

BY HBSDEALER Staff

Lumber Liquidators is under fire again over charges that its products contain illegal levels of formaldehyde after Global Community Monitor and Sunshine Park LLC filed a lawsuit in California state court July 23.

According to allegations by the Global Community Monitor, the retailer’s Chinese-made flooring was found in independent lab tests to emit considerably more formaldehyde than the level that requires cancer warnings under California law. More than 50 tests of the Chinese-made laminate flooring were conducted using various testing methods and sample batches, with results pointing to an average exposure level that’s over 100 times the legal limit for selling without a warning label.

"The levels of formaldehyde our tests found in Lumber Liquidators’ laminate flooring are astounding and alarming," said Denny Larson, executive director of Global Community Monitor. "It’s unconscionable that Lumber Liquidators would sell this product to customers to install in their homes without informing families of the potential health risks involved, especially since they make a point of bragging about how environmentally safe it is."

If true, these allegations would place Lumber Liquidators under violation of California’s Proposition 65, which requires potentially cancer-causing products to carry a warning label, according to established limits for chemical levels.

Lumber Liquidators issued a July 23 statement denying these claims, however, reaffirming its commitment to upholding environmental standards and independently testing its products to ensure compliance.

“The allegations in this lawsuit concerning our product are simply flat-out false," read the statement. "Our product meets relevant environmental standards and undergoes rigorous, independent, third-party testing. More specifically, our internal testing and that conducted by third parties concluded that product levels fell well below the Proposition 65 “safe harbor” limits."

Lumber Liquidators added that it strives to maintain transparency about its quality control processes, providing Proposition 65 notices on customer invoices and in-store signage.

"In short, all of our flooring meets the highest quality and environmental standards – that’s why we sell it, that’s why we use it in our own homes, and that’s why we are a market leader," continued the retailer. "We will not let factually inaccurate and legally flawed lawsuits filed by a party with a clear financial motive influence our approach to our business or our customers.”

The company has had a spate of run-ins with environmental advocacy groups and the U.S. authorities in recent years, including an investigation following Seeking Alpha analyst Xuhua Zhou’s report last June that it was selling products containing illegal levels of formaldehyde

Last October, feds descended on Lumber Liquidators’ Toano, Virginia headquarters after an environmental advocacy group issued a report that the retailer had been purchasing wood from protected forests in Far East Russia through a Chinese supplier, placing it in violation of the Lacey Act.

Lumber Liquidators has since taken steps to buff up its compliance team, hiring a new chief compliance and sustainability officer in February and a director global product compliance and director global trade and customs compliance in June.

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AV Homes taps Cady to run Arizona division

BY David Salazar

Homebuilder AV Homes has appointed Chris Cady as the new president of its Arizona division. Arizona is one of the Scottsdale-based company’s two main markets, with other developments focused on Florida.

"We are delighted to have Chris Cady join us at AV Home,” AV Homes EVP Carl Mulac said. “His vast experience in multiple markets and diverse market segments will be a valuable addition to the Arizona Team."

Cady will oversee the eight AV Homes communities in Arizona, several of which are set to open this year. He’ll also oversee next year’s opening of a 55-plus community in Goodyear, Arizona.

Cady, most recently KB Homes’ central California division president, has also overseen a division of Pulte homes and got his start at Home Capital as a project manager.

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USG’s income is highest in 7 years

BY HBSDealer Staff

USG Corporation touted its second quarter results, which brought in its highest quarterly net income since 2007.

Net sales for the three months ended June 30 came in at $948 million, an increase of 3.5% from $916 million year-over-year.

Net income for the quarter totaled $57 million, up from $25 million in the second quarter of 2013. An adjusted operating profit of $93 million was also a nice boost, up from $76 million.

“I’m pleased to report our best quarterly results in seven years,” said James Metcalf, chairman, president and CEO. “Despite slower than expected acceleration in industry opportunity, most of our businesses and products improved their performance from a year ago and we also recorded our first full quarter of operations in our USG Boral joint venture.”

Other highlights included an increase in shipments of U.S. Gypsum wallboard (from 1.29 BSF to 1.32 BSF). However, ceilings operating profit went down to $24 million compared to $26 million.

 

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