It’s been a rough start to the holiday season for Lumber Liquidators, the top-selling flooring retailer in America. Last month I noted that federal officers raided Lumber Liquidators headquarters, investigating whether the company had imported illegally logged wood products from eastern Russia, the home of the critically endangered Siberian tiger. Importing illegally harvested timber or wildlife violates the U.S. Lacey Act, with violators subject to fines and penalties. Now, after facing criticism from a noted hedge fund advisor, Lumber Liquidators is being hit with class action lawsuits.
On Nov. 21, well-known hedge fund manager Whitney Tilson gave a presentation to a conference of investors in which he argued that Lumber Liquidators’ recent increases in profit margins have come, in part, by increasing imports of illegally harvested wood from China and the Russian Far East. Tilson’s presentation notes that over the last two years, Lumber Liquidators has increased the percentage of wood sourced from Asia from 42 percent to 51 percent, coinciding with a rapid increase in profits. New investigative reports have provided compelling evidence that much of this wood sourced by Lumber Liquidators was illegally harvested in the Russian Far East.