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Jeff Lorberbaum, Mohawk chairman and chief executive officer, called this one of the most difficult periods he has experienced in the carpet and flooring industry.
"The industry environment shows no signs of a recovery," he said.
But, Mr. Lorberbaum said he remains confident the company will rebound.
"We remain convinced Mohawk will be a stronger company when we come out of this economic cycle," he said.
According to the company, Mohawk's sales were about $1.76 billion during the three months ending Sept. 27, a drop of 9 percent from the $1.94 billion reported during the same time last year.
The Calhoun, Ga.-based carpet manufacturer reported a net loss of $1.4 billion, or $20.37 a share, during the third quarter of 2008. During the third quarter of 2007, Mohawk reported net earnings of $122 million or $1.78 per share.
Company officials said a preliminary goodwill and impairment charge of more than $1.2 billion led to the losses.
According to a company statement, the impairment charge was a result of Mohawk's "declining stock price and deteriorating industry conditions."
Chief Financial Officer Frank Boykin said the non-cash write-off of goodwill does not affect Mohawk's operations, liquidity or debt covenants.
"It is driven primarily by the decline in the stock price below the book value," he said.
On Tuesday, Mohawk's stock closed at $44.37, a 95 cent drop from Monday's close. Records show Mohawk's stock traded at well over $80 a share about a year ago.
Mr. Lorberbaum said the third quarter was more difficult than officials had anticipated, and he doesn't expect to see much of improvement until the first half of 2009. The company reported fourth-quarter guidance far below Wall Street estimates.
Analysts predicted Mohawk would earn $1.04 a share for the fourth quarter. Mohawk officials Tuesday announced fourth-quarter guidance of between 20 and 30 cents a share.
Kim Gavin, editor of Floor Covering Weekly, said Mohawk's "dismal" report is a result of a continuing soft residential market and a commercial market that is beginning to slump.
"The building market has been slow, but Mohawk doesn't do as much building as other companies so they haven't been affected as much," Ms. Gavin said. "But now the commercial market is beginning to slow."
Mohawk Industries announced in September that 236 workers will be out of work as a result of plant closures, but officials said the company likely will not see benefits from the cuts until next year.
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