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Crisis of the Week: Lumber Liquidators Fights Flooring Foes | WSJ

Lumber Liquidators was the subject of this week’s crisis, as the company has seen its stock price take a wild ride down and back up after allegations raised in a ’60 Minutes’ story. The story alleged the laminate-flooring material sold by the company didn’t meet emission standards for the chemical formaldehyde. The story prompted one U.S. senator to call on federal agencies to investigate, and the company’s stock plunged as a result of the negative coverage.

Vincent Schiavone, executive chairman, ListenLogic: “Rule number one: Don’t make things worse! That is exactly what Lumber Liquidators did by agreeing to an on-camera interview. Lumber liquidators is experiencing an attack crisis in the digital world where consumers, media, activists, lawyers, regulators and politicians are aligned as stakeholders on an issue damaging to the reputation and value of the company.

“While the strategic goal driving stakeholders, short sellers and tort lawyers seems to be financial in nature, the enabling trigger issue is the health and safety of ingredients in the product. The core issue driving the conversation is corporate profits at the health risk of the customer.

“Lumber Liquidators chose to participate in the ‘60 Minutes’ story, something they should not have done. Often putting senior executives on the spot in an interview puts the company at greater reputation risk than issuing a statement. A written statement would have been less damaging. If a company is going to respond to an attack issue they need to be prepared to answer the key question: ‘What did you know and when did you know it?’ That answer determines if you can or want to apologize, take responsibility, reassure that all is OK and promise it will never happen again.

Read the entire piece here.

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