Why Americans are suddenly repairing their own appliances
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Record-low consumer sentiment, the Iran war and a relatively dormant housing market are suppressing sales of big-ticket home items, according to Whirlpool.
Why it matters: Consumer demand for appliances plunged soon after the war began, resulting in "recession-level industry decline," the U.S. manufacturer said.
Driving the news: Whirlpool shares plummeted Thursday after the appliance maker said industry demand dropped 10% in March — the first full month after the war started.
- It marked "a very, very unusual low level," CEO Marc Bitzer said on an earnings call, noting "the last time you've seen minus 10% was during the global financial crisis."
- Appliance owners are suddenly trying to fix their own machines to save money: "One of the strongest businesses which we had in Q1 was actually our spare parts and repair business," Bitzer said.
Zoom in: Interest rates remain elevated, making it more expensive for people to borrow to buy appliances — and housing sales remain low, removing one standard incentive for consumers to buy washers and dryers.
- "The main drivers of demand are weak," GlobalData retail analyst Neil Saunders tells Axios in an email.
- "Some consumers don't have the financial firepower to buy, some lack confidence, and many don't want to finance purchases at expensive interest rates. This is driving more people to repair and more people to postpone upgrades," he said.
The impact: Whirlpool said it would suspend its common dividend and cut more than $150 million in structural costs to pay down debt.
- The company's stock closed down nearly 12% Thursday, and is down 33% year to date.
The intrigue: Despite struggling sales, Whirlpool has raised effective prices by more than 10% in what Bitzer called the company's "largest price increase in more than a decade."
- It's doing it by offering fewer discounts and shortening sales events.
- The company plans to increase list prices by roughly 4% in July, moves all designed to bolster North American margins "back to a healthy level," Bitzer said.
"We're passing on three years of pent-up inflation, which, at one point, we just have to pass on to consumers," Bitzer said.
- "We know what we have to do because of our cost base. We will reflect the cost of our products in the consumer prices."
What we're watching: Whether President Trump's reimposition of tariffs on imported appliances helps Whirlpool, which makes about 80% of its products in the U.S., get back on track.
