Dive Brief:

• Lumber Liquidators announced Thursday that CEO and President Robert Lynch unexpectedly resigned. The company is under federal investigation for allegedly selling Chinese-made laminate flooring that contained dangerous levels of formaldehyde, a carcinogen.

• The company said it would begin to search for a replacement. Founder Thomas Sullivan will serve as CEO until a replacement is found. 

• Lumber Liquidators also announced that John Presley has been named the non-executive chairman of the board of directors. Lynch resigned as a member of the board.

Dive Insight:

Lumber Liquidators has been under pressure since a 60 Minutes report in March alleged the company was selling laminate flooring that contained too-high levels of formaldehyde. Multiple federal agencies, including the U.S. Justice Department and the Consumer Product Safety Commission, have since announced they are conducting investigations into the company and its products.

Big builders D.R. Horton, Lennar, and others were also quick to distance themselves from the retailer. Last week, it was revealed Lumber Liquidators sued nine of its insurance carriers for denying to cover it for lawsuits filed against the flooring retailer by customers. 

Despite saying 60 Minutes' testing of its products was misleading and inaccurate, Lumber Liquidators announced in early May they would halt sales of Chinese-made laminate flooring. The company subsequently hired Louis Freeh, the former director of the Federal Bureau of Investigation and leader of Penn State's internal investigation into the Jerry Sandusky case, to lead its own internal investigation of its products. 

The company has maintained its products are safe, but the market has yet to respond positively. Lumber Liquidators stock has fallen 62% in 2015, and fell another 16% at press time after the announcement of Lynch's resignation on Thursday morning.