Lumber Liquidators is getting nailed. An investigative report on 60 Minutes accused the company of selling unsafe laminated flooring. A predictable fall in the company’s share price ensued.
But rather than mount a defense, Lumber Liquidators has been mostly silent. That’s making a bad situation worse.
This isn’t the first time a high profile investigative news program like 60 Minutes has taken a shot at a public company. When this happens, companies usually offer a vigorous response and get it into the hands of those most important to them, like employees, customers and investors.
Instead, for reasons known only to them and their advisors, Lumber Liquidators issued only a brief statement and then went underground. It canceled an appearance at an investor conference, and its investor relations chief isn’t taking questions. It has promised to hold a conference call on the issue – next Thursday.
Stonewalling like this is never good in a crisis.
Amid all the silence, analysts are downgrading the shares, members of Congress are calling for hearings and the stock continues to fall, down nearly 30% since the broadcast.
What’s so puzzling is that Lumber Liquidators has known for weeks that the 60 Minutes report was coming. It knew the issues it would raise and the negative light in which it would portray them. There was plenty of time to get ready to respond. But the company is acting as if this caught them by surprise.
The stakes are high for the conference call next Thursday. Its the sort of thing that can make or break a management team. Between now and then it’s going to be a long week for Lumber Liquidators and its shareholders.