(Bloomberg) -- Whirlpool Corp., the owner of Maytag, lowered its full-year earnings forecast, as consumers continued to shy away from big-ticket appliance purchases amid a weakening housing market.
Adjusted earnings per share will be about $12 this year, the company said Wednesday, down from the $13 to $15 it had previously seen. Analysts had estimated $12.56, according to the average of projections compiled by Bloomberg. The company kept its full-year revenue estimate the same, at $16.9 billion.
Whirlpool shares were little changed at 9:45 a.m. in New York on Thursday. The stock has dropped about 19% this year as of Wednesday’s close, compared with a 13% gain in the Russell 1000 Index.
Whirlpool’s net sales came in just above analysts’ estimates for the quarter ended June 30. But revenue for major appliances in North America fell 5.7% from the same period last year as demand slumped for large items such as washing machines and ranges. The company’s discretionary business — where consumers upgrade to new appliances — has been hurt by high prices and weak home sales, although some may be shifting to home renovations.
“You have a consumer who’s somewhere navigating between inflation, interest rate increases, global wars and an election campaign which seems to be played on doomsday scenarios. So that does not help consumer confidence,” Whirlpool Chief Executive Officer Marc Bitzer said in an interview.
“It is visible in what we call the discretionary side of demand,” he said. “It’s a big ticket item, a big part of disposable income.”
The results show that shoppers may be under increasing financial strains. June existing US home sales, which drive consumers to buy appliances, dropped to the lowest since December. New home sales also fell, declining to a seven-month low last month thanks to stubbornly high mortgage rates and prices that have deterred potential buyers.
The company expected that interest rate reductions would occur sooner and give a boost to housing, but that hasn’t happened, Bitzer said.
“The hope that there’s going to be a housing recovery in 2024, I think that’s more postponed,” he said. “It will happen — there’s no question in my mind. It’s just not going to be in 2024.”
Whirlpool’s more expensive brands such as JennAir have been hit particularly hard by the downturn in housing. “The super premium right now is soft,” Bitzer said. Core brands including Maytag and Whirlpool are “holding up reasonably strong,” he said.
The Benton Harbor, Michigan-based manufacturer said earlier this year that it was cutting 1,000 salaried positions to reduce costs. The company said Wednesday that it is on track to reduce expenses by as much as $400 million in 2024.
Along with additional home remodels, the company is looking to its domestic countertop appliance segment for growth. It’s touting new automatic espresso makers and KitchenAid battery powered food choppers and hand blenders. Global sales of small domestic appliances grew 11% in the second quarter from the same period in 2023.
Bitzer said a new grain and rice cooker is popular with shoppers and did well during Amazon.com Inc.’s recent Prime Day sale.
“There’s a growing consumer segment that is heavily into grain cooking,” he said.
Whirlpool said it would generate about $500 million in free cash flow this year, down from as much as $650 million it had previously projected.
In June, Whirlpool shares jumped after Reuters reported that Robert Bosch GmbH was considering a bid for the company. The German industrial firm, which makes auto parts, has been pushing further outside of its core business due to cooling sales of electric vehicles.
(Updates share price in the third paragraph, adds additional CEO comments in 10th paragraph.)
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