Whirlpool Corp., owner of the Maytag and KitchenAid brands, projects sales in 2024 will be weaker than Wall Street expectations as consumers forgo upgrading appliances. Stocks fell.
Revenue will be about $16.9 billion this year, the Benton Harbor-based company said Monday. That’s below analysts’ average projection of $17.7 billion, according to data compiled by Bloomberg. Earnings guidance also came in below estimates.
The outlook renews concerns that U.S. consumers’ resilience may be fading as some shoppers pull back from big-ticket purchases like appliances, electronics and furniture. Whirlpool said it is seeing lower demand for appliances in North America, the region that generates more than half of the company’s revenue.
“We continue to see an environment where the discretionary part of our business is under pressure,” Chief Financial Officer Jim Peters said in an interview. “This typically happens when homeowners buy an existing home and come in and replace the appliances; they make the decision to upgrade.”
The company’s shares fell 6.6% on Tuesday. Last year, Whirlpool fell 14%, compared with a gain for the S&P 500 index.
The company’s performance will come under pressure this year as “depressed real estate transactions and a pullback in discretionary spending weigh on appliance demand,” said Drew Reading, an analyst at Bloomberg Intelligence.
The real estate market is a drag
Whirlpool’s results indicate continued weakness in the US housing market. High borrowing costs have caused existing home sales to plummet, leaving many buyers on the sidelines as homeowners refrain from listing their properties.
“Existing home sales are at their lowest level in decades,” Peters said. “Absent a significant change in mortgage rates, I don’t know if existing home sales are going to change much from where they were in 2023,” he said, adding that they could possibly recover in the second half of 2024. He is more optimistic about new home sales, he said. “It’s going to start to slowly recover this year.”
Whirlpool’s fourth-quarter revenue and earnings beat analyst estimates, helped by market share gains in North America and lower costs. Peters said consumers are still replacing broken appliances, but those buyers are more price-sensitive than others.
“When consumers are in that pressure situation, they tend to be a little more price sensitive than someone who is actually making a conscious decision to upgrade an existing appliance,” he said.
The appliance maker expects to reduce expenses by up to $400 million this year as part of a cost-cutting program. Some of the savings will come from finding lower-cost materials for components such as motors, pumps and compressors, while other savings will come from a reduction in corporate jobs, Peters said.
“We will have fewer people who will be needed in certain parts of the business, so we will adjust our workforce appropriately,” he said, declining to give details on the timing and number of job losses. Production workers will not be affected, she said.
Whirlpool, which bought garbage disposal maker InSinkErator in 2022, plans to cut its debt by another $500 million this year after reducing it by that amount in 2023.
Sweden’s Electrolux AB, which competes with Whirlpool in the home appliances market, said earlier this month it will report an operating loss in the fourth quarter due to weakening demand in its North American business.