Lowe’s halts sales of Chinese flooring over formaldehyde concerns

People walk outside a Lowe's store in East Peoria, Ill.
Daniel Acker | Bloomberg | Getty Images
People walk outside a Lowe's store in East Peoria, Ill.

Home improvement retailer Lowe's says it is halting sales of some of its Chinese-made laminate flooring "out of an abundance of caution" after a financial blogger said that it may have the same issues with formaldehyde that have been dogging Lumber Liquidators.

"Today, we want to reassure our customers if there are quality issues with the laminate flooring products we sell, we will take aggressive action to address them," Lowe's Chief Merchandising Officer Mike McDermott said in a statement. The company said it would conduct independent testing on the products in question.

In a post Friday on the Seeking Alpha blog, hedge fund analyst Xuhua Zhou—who acknowledges he is a short seller of Lowe's stock—cites testing performed by an anonymous "industry source" that allegedly shows high levels of formaldehyde in a sample of laminate flooring purchased from Lowe's. The flooring was manufactured in China by Tecsun, which is also a supplier to Lumber Liquidators.

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A Lowe's spokeswoman, Connie Bryant, notes that the company had already begun moving away from Chinese-made laminate flooring, with plans to sell only U.S.-made product by July 1. She said the decision came in response to customer concerns after a report on the CBS program "60 Minutes" in March alleging formaldehyde issues in Lumber Liquidators products.

Unlike at Lumber Liquidators, flooring makes up a small part of Lowe's business—just 6 percent of sales. Bryant says less than 10 percent of its laminate product is manufactured outside the U.S. She also notes that the sample in question was a special order product, while "the vast majority of the laminate flooring we sell is in-stock product that customers purchase in-store and carry out."

Also after the "60 Minutes" report, Bryant said Lowe's sought and received written confirmation from its Chinese suppliers that their products met U.S. safety standards. But a picture of the sample cited in the blog post shows the box is labeled "California 93120 Compliant for Formaldehyde Phase 2," meaning it purportedly meets the standards of the California Air Resources Board (CARB), the only government agency that currently regulates formaldehyde levels in laminate flooring.

Read MoreBuilders assure customers after Lumber Liquidators scare

A CARB spokesperson told CNBC earlier this week that the agency has collected samples from a variety of retailers, and that in preliminary testing some samples exceeded the state's formaldehyde limits. But she would not say which companies were involved or when the investigation might be complete.

Lumber Liquidators, which has insisted its products are safe, disclosed on Wednesday that it expects criminal charges relating to its overseas sourcing, based on recent communications with the Justice Department. The company said it too plans to move toward North American and European suppliers for laminate flooring and scale back its purchases from China. But an industry source tells CNBC the company still has considerable amounts of the Chinese laminate in stock.

The decision by Lowe's to halt the sales of its Chinese laminate flooring was reported earlier by Bloomberg News.