According to the law firm press release, Lumber Liquidators is one of the largest retailers of hardwood flooring in North America. The Company prides itself on its commitment to in-stock inventory levels and a focused supply chain that allow it to consistently meet customers' expectations.
As alleged in the Complaint, Defendants misrepresented that quality control requirements implemented by Lumber Liquidators would neither affect its extensive and diverse supplier network, nor impact its revenue, earnings, or margins. In addition, Lumber Liquidators continually touted that it would continue to experience revenue and earnings growth and margin expansion. As a result of these misrepresentations, Lumber Liquidators stock traded at artificially inflated prices during the Class Period.
On July 9, 2014, the Company announced poor financial results, which it attributed to lower than planned inventory levels stemming from production delays as Lumber Liquidators enhanced its quality assurance requirements. Lumber Liquidators also revealed that heavy discounting during the Class Period caused margins to contract in the second quarter compared to the same quarter in 2013. These disclosures caused a material decline in the price of Lumber Liquidators stock.