Whirlpool and Sears cut ties over pricing
A West Michigan appliance maker is pulling its products from a national department store chain, citing a conflict over pricing.
Benton Harbor-based Whirlpool Corporation will no longer sell appliances from its brand portfolio in Sears stores, effective Friday, according to an article by The Associated Press in The Detroit News today. The moves includes brands like Whirlpool, Maytag, KitchenAid and Jenn-Air.
Sears told AP it will sell off the remainder of its Whirlpool inventory.
Hoffman Estates, Illinois-based Sears Holding Corporation and Whirlpool have been in business together more than 100 years, according to AP.
Sears will now sell continue to sell appliances under Kenmore — a private label brand that will continue to be supplied by Whirlpool Corporation — and appliances from other unaffiliated brands, like LG, Samsung, GE, Frigidaire, Electrolux and Bosch.
In a conference call to investors this morning, Whirlpool CEO Marc Bitzer said the company informed Sears in May that it would no longer supply branded products to the chain after the two parties could not reach a favorable pricing agreement.
“We are continuing to supply Kenmore brand products to Sears, and this applies only to our branded business,” Bitzer said.
Bitzer said Whirlpool's appliance sales in Sears stores represent an increasingly small slice of the company’s total appliance sales.
“The entire Sears business has declined over time and now represents about three percent of our global business, of which the branded portion is only a small fraction,” Bitzer said.
In a letter to its stores, Sears said Whirlpool was making “demands” that would make it too difficult to sell the appliances at "a competitive price," AP reports.
This month, Whirlpool announced global cost-based price increases on the majority of its business to offset the impact of the sustained price inflation of its raw materials.
“We have done in the past cost-based price increases whenever we were faced with a significant material headwind,” Bitzer said in the conference call. “Particularly in markets like the U.S. and Brazil, we’ve been very successful with this. We have full confidence in the price increase.”
Sears’ business has taken continual hits over the past two decades, as stores like The Home Depot, Lowe’s and Target gained market share and Amazon.com and other online retailers hit the scene, AP says.
In January, Sears announced the closure of 11 Sears and Kmart stores in Michigan, including the Woodland Mall Sears in Kentwood and the Kmart at 1501 E. Apple Ave. in Muskegon., according to a previous Business Journal report.
American consumers buy "most" of their small appliances from Walmart, according to the market research firm TraQline, as reported by AP. Amazon is second, Target is third and Sears is fourth.
Shares of Whirlpool Corporation (NYSE: WHR) were trading at $162, down 10 percent, as of 2:40 p.m. today.