Lumber Liquidators watched its stock dive on the afternoon of Friday, Sept. 27, 2013, after federal officials did a raid on the hardwood flooring retailers headquarters in Toano, Virginia. Investor's Business Daily reported that the raid was part of a probe into possible illegal imports. The company said they don't know why they've been targeted.
The Department of Homeland Security and the U.S. Fish and Wildelife Service executed a sealed court-issued search warrant on Thursday at the headquarters and also at one of the stores in Richmond, Virginia.
The government raid took its toll on stocks as shares plummeted as much as 11 percent on Friday and they closed down five percent. Before this raid at Lumber Liquidators, the stock had risen an amazing 114 percent as the home-building market saw a surge upward and more consumers went for remodeling upgrades.
"I talked to their management 20 minutes ago and they were scratching their heads" as to why Lumber Liquidators was raided, ISI Group analyst Matt McGinley told IBD on Friday afternoon. "Nobody in the company knows what the scope and size of the investigation is. The only thing they know is the feds showed up and took documents," he said.
There are more than 300 Lumber Liquidators stores in the United States, and they have said that investigators will be given information and documents. Those documents will be relevant to certain wood-product imports that are being looked at.
"The company takes its sourcing very seriously, and is cooperating with authorities to provide them with requested information," it said.
Authorities suspect wood the company said originated in Russia actually came from other places. A report said investigators were searching for emails and other documents.