Lowe’s stops sale of flooring product after safety questions

Mooresville-based Lowe’s Cos. discontinued sale of a certain type of flooring Friday after an investor alleged the product contained toxic levels of formaldehyde.

The move came after Bloomberg News highlighted allegations from an independent investor named Xuhua Zhou, who had said Lumber Liquidators sold flooring with toxic levels of formaldehyde and that Lowe’s was doing the same.

“New evidence has come to my attention that Lumber Liquidators may not have been the lone violator when it comes to laminate floor sourcing,” Zhou said in a report posted on the Seeking Alpha website Friday. “Lowe’s, a behemoth in home improvement, has been selling similar questionable products as recent as late March.”

Zhou – who is shorting Lowe’s stock, meaning he’s betting it will decline – first raised doubts about Lumber Liquidators in 2013. That was followed by lawsuits and a story on the “60 Minutes” news show in March that included third-party testing showing toxic levels of formaldehyde in some products. The fallout has included declining sales, a probe by federal regulators and a plunge in the retailer’s shares.

In his latest post, Zhou said he obtained test results from a source that showed flooring purchased from a Lowe’s in Texas in late March had levels of formaldehyde similar to what “60 Minutes” found at Lumber Liquidators.

Zhou could not immediately be reached for comment Friday.

After an early decline, Lowe’s shares closed up 2.67 percent at $70.70 on Friday.

Lowe’s “takes customer concerns very seriously,” and is looking into the allegations, Lowe’s spokeswoman Karen Cobb told the Observer. She said the product was not sold in Lowe’s stores but rather only online and through special orders.

“A customer cannot go into a store and see this in a box on the store shelf and buy it,” Cobb said of the product, Tecsun brand laminate flooring.

Lowe’s received a letter from Tecsun stating that it meets the California Air Resources Board regulations, which are some of the strictest air quality regulations in the world, Cobb said.

Flooring, which includes wood, laminate and tile, makes up 6 percent of Lowe’s sales. The company doesn’t break out the laminate portion separately. Bloomberg News contributed to this story.

This story was originally published May 1, 2015 at 10:15 AM with the headline "Lowe’s stops sale of flooring product after safety questions."