Mohawk Industries, Inc. Loss Form

The filed complaint alleged that, faced with slowing demand for its conventional flooring products, the Company engaged in a scheme to inflate its revenues and earnings by booking fictitious sales of those products. This practice is known as channel stuffing and was used by the Mohawk to hide severely declining demand for conventional flooring products. Throughout the Class Period, Defendants made false and/or misleading statements about Mohawk’s sales growth and the demand for the Company’s conventional flooring products. Defendants also reassured investors about the Mohawk’s increasing accounts receivable and inventory levels by falsely attributing those increases to external factors like rising raw material costs and inflation. As a result of these misrepresentations, shares of Mohawk’s common stock traded at artificially inflated prices during the Class Period.