3 Min Read
(Reuters) - Lumber Liquidators Holdings Inc (LL.N) appointed board member John Presley chief executive, five months after Robert Lynch resigned following a report that the company sourced flooring laminates with harmful levels of a known carcinogen.
Presley, former CEO of First Capital Bancorp Inc FCVA.O, replaces acting CEO Thomas Sullivan, the founder of Lumber Liquidators.
Sullivan will become a special adviser to Presley and remain on the struggling hardwood flooring retailer's board.
Presley has more than 30 years of leadership experience with significant operational, turnaround and risk management expertise, Lumber Liquidators said.
Presley joined Lumber Liquidators as a director in April 2006 before the company went public in 2007.
The company on Wednesday also reported a bigger-than-expected 11.3 percent fall in third-quarter net sales to $236.1 million.
Demand has been hurt by allegations by a CBS (CBS.N) "60 Minutes" show in March that the company's laminates from China contained excessive levels of cancer-causing formaldehyde.
The company's shares were down almost 7 percent at $13.25 in premarket trading.
The company said same-store sales fell 14.6 percent in the quarter ended Sept. 30 due to a drop in traffic and average value of sales.
Analysts polled by research firm Consensus Metrix had expected same-store sales to drop 7.1 percent.
Lumber Liquidators, which has suffered falling sales, lawsuits and the departures of three senior executives since the scandal broke, has stopped buying laminate flooring from China.
Lynch, who had been CEO since 2012, resigned unexpectedly in May, less than a month after Chief Financial Officer Daniel Terrell quit.
The company said in April it is facing 103 class action lawsuits related to the laminate flooring sourced from China.
It agreed to pay $10 million last month to resolve an unrelated U.S. Department of Justice investigation and plead guilty to violating laws and importing products from foreign suppliers who had harvested more timber than their permits allowed in locations such as Eastern Russia.
Reporting by Sruthi Ramakrishnan in Bengaluru; Editing by Maju Samuel