MOHAWK DEADLINE ALERT: Faruqi & Faruqi, LLP Encourages Investors Who Suffered Losses Exceeding $50,000 In Mohawk Industries, Inc. To Contact The Firm
The case, Public Employees' Retirement System of Mississippi v. Mohawk Industries, Inc. et al,.
NEW YORK, Feb. 11, 2020 (GLOBE NEWSWIRE) -- Faruqi & Faruqi, LLP, a leading national securities law firm, reminds investors in Mohawk Industries, Inc. (“Mohawk” or the “Company”) (NYSE:MHK) of the March 3, 2020 deadline to seek the role of lead plaintiff in a federal securities class action that has been filed against the Company.
If you invested in Mohawk stock or options between April 28, 2017 and July 25, 2019 and would like to discuss your legal rights, click here: www.faruqilaw.com/MHK. There is no cost or obligation to you.
You can also contact us by calling Richard Gonnello toll free at 877-247-4292 or at 212-983-9330 or by sending an e-mail to [email protected].
CONTACT:
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Attn: Richard Gonnello, Esq.
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Telephone: (877) 247-4292 or (212) 983-9330
The lawsuit has been filed in the U.S. District Court for the Northern District of Georgia on behalf of all those who purchased Mohawk securities between April 28, 2017 and July 25, 2019 (the “Class Period”). The case, Public Employees' Retirement System of Mississippi v. Mohawk Industries, Inc. et al,. No. 20-cv-00005 was filed on January 3, 2020 and has been assigned to Judge Eleanor L. Ross.
The lawsuit focuses on whether the Company and its executives violated federal securities laws by making false and misleading statements about the Company’s sales growth and demand for its Conventional Flooring Products. Despite the Company’s accounts receivable and inventory levels increasing during the Class Period, Defendants assuaged investor concerns by misleading them to believe that those increases were the result of external factors like rising raw material costs and inflation. But in reality, Mohawk was engaging in channel-stuffing to artificially inflate its sales and revenues. Defendants failed to disclose that Mohawk was stuffing its distribution channels with Conventional Flooring Products, which made the Company’s sales growth and financial performance appear far better than they were. As a result of these misrepresentations, shares of Mohawk’s common stock traded at artificially inflated prices during the Class Period.
Specifically, on July 25, 2018, after the market closed, the Company reported disappointing financial results for the second quarter of 2018, with earnings that were well below both Wall Street estimates and the Company’s previous guidance range. The following morning, in a conference call with analysts and investors, Mohawk also disclosed deteriorating margins which it attributed, in part, to significant production cuts the Company imposed to normalize inventory. Specifically, the Company revealed that it “produced less [Conventional Flooring Products] than [it] sold to reduce inventory.” Similarly, Mohawk also revealed that it “reduced [its] production volumes more than [the Company] had thought” and that the Company “came into the year with higher inventories than [it] wanted to have.”
On this news, Mohawk’s stock fell from a closing price of $217.37 per share on July 25, 2018 to $179.31 on July 26, 2018—a $38.06 or 17.51% drop.
Then, on October 25, 2018, after the market closed, the Company reported sales and earnings for the third quarter of 2018 that substantially missed analysts’ estimates and the Company’s previous guidance range, with sales growth in all segments lower than estimates. Company executives attributed Mohawk’s poor financial results, in part, to further manufacturing reductions that were required during the period to control inventory buildup.
On this news, Mohawk’s stock fell from a closing price of $151.07 per share on October 25, 2018 to $115.03 on October 26, 2018—a $36.04 or 23.86% drop.
On July 25, 2019, after the market closed, Mohawk reported that sales in its Flooring NA segment were down 7% and revealed that the Company was again reducing production to control inventory levels and match its supply with customer demand.
The Company also revealed that increased competition and excess inventory had impacted its financial results, particularly in its Global Ceramic segment. The Company announced that “lower demand” for certain Conventional Flooring Products created excess inventory which impacted the Company’s sales and margins. The Company further revealed that there was a “big buildup in inventory in ceramic” in the sales channel, which had negatively impacted the Company’s sales. Accordingly, the Company provided a weak earnings forecast for the third quarter of 2019, which was well below analysts’ estimates.
As a result of these disclosures, Mohawk’s stock fell from a closing price of $156.36 per share on July 25, 2019 to $128.84 on July 26, 2019—a $27.52 or 17.60% drop.
The court-appointed lead plaintiff is the investor with the largest financial interest in the relief sought by the class who is adequate and typical of class members who directs and oversees the litigation on behalf of the putative class. Any member of the putative class may move the Court to serve as lead plaintiff through counsel of their choice, or may choose to do nothing and remain an absent class member. Your ability to share in any recovery is not affected by the decision to serve as a lead plaintiff or not.
Faruqi & Faruqi, LLP also encourages anyone with information regarding Mohawk’s conduct to contact the firm, including whistleblowers, former employees, shareholders and others.
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