Dive Brief:
- Months after Lumber Liquidators was publicly accused of selling flooring tainted with dangerous levels of formaldehyde, a smaller flooring company — California-based Ark Floors, which imports wood products from China — is now facing the same accusations.
- Whitney Tilson, the hedge fund manager who brought the initial claims against Lumber Liquidators, asked HPVA Laboratories to test Ark's products. Josh Hosen of HPVA told The New York Times the test studied five types of Ark's laminate products and found formaldehyde levels were "well above" emission standards under the California Air Resources Board.
- Ark Floors, a subsidiary of Chinese wood company A&W, sells its laminate products to distributors, who then disperse them among retailers across the U.S. The company reportedly has purchased its wood products from at least two of the same mills as Lumber Liquidators, according to The Times. However, it is unclear exactly where Ark's products ended up and whether they are still on store shelves.
Dive Insight:
In the time since the "60 Minutes" report bringing the accusations against Lumber Liquidators to light was aired, the company has faced several lawsuits, government investigations and possible criminal charges. The company's stock has dropped more than 70% since the news broke in March, and it has seen a shake-up in its executive suite.
In May, Lumber Liquidators announced it would stop selling the flooring accused of containing high formaldehyde levels. And in October, the retailer pleaded guilty to violating the Lacey Act — which involves making false import declarations about the origin of the timber used in its hardwood flooring — and said it would pay $10 million as part of a U.S. Department of Justice settlement.
Homebuilders immediately distanced themselves from Lumber Liquidators after the controversy erupted. D.R. Horton, Pulte, Lennar and others issued statements in March saying they do not buy or sell Lumber Liquidators' products and that they have verified that their own flooring vendors do not sell the allegedly tainted laminates.
The new accusations against Ark show that unsafe levels of formaldehyde are a "pervasive problem" affecting products from several retailers, Denny Larson, an environmental consultant told The Times. "It’s not just a Lumber Liquidators problem."
The claims against Ark and Lumber Liquidators could be a sort of boon to other manufacturers and some builders, as the fear of high formaldehyde levels in the laminate flooring could steer consumers to choose higher-priced solid wood or tile instead.
Ark representatives have not yet commented on the accusations.
