The tough US housing market is hurting sales of big-ticket home appliances, Whirlpool says
Dominick Reuter/Business Insider
- A tough US housing market is weighing on sales of pricey home appliances.
- Appliance maker Whirlpool slashed guidance in its recent earnings release, citing weak housing market activity.
- US home sales fell in June to their slowest pace in more than a decade as median home prices soar.
The US housing market is tough for buyers, and the slowdown in sales activity means Americans are spending a lot less on big, pricey appliances these days.
In its latest earnings, Whirlpool cut its full-year outlook, adjusting annual earnings guidance to $12 a share, down from a range of $13-$15 as sales of big-ticket items slow.
Whirlpool's North American major appliance sales fell 5.7% year-over-year, hurting earnings even as the segment's sales in Latin America and Asia grew by 11.3% and 19.7%, respectively.
Whirlpool stock is down about 17% year-to-date, and was trading at $100.65 per share on Thursday.
CEO Marc Bitzer attributes the fall in sales to a tough real estate market. In June, US home sales hit their lowest level since 2010, declining 5.4% from May to June according to data from the National Association of Realtors.
Meanwhile, median home prices soared 4.1% year-over-year to $426,900, marking a consecutive monthly record.
"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," Bitzer said in an interview with Bloomberg.
On the earnings call, Bitzer said the company expected the Fed to cut rates at some point this year to ease home prices, but those cuts have yet to materialize.
"There's no doubt that we have been and still are at a low point in the US housing market. With interest rate reductions, this will ease at some point and we are well-positioned to benefit from improving demand," he said.
Fed officials have hinted at a September cut, and markets are eyeing as many as three cuts through the rest of this year as the soft-landing scenario of steady economic growth and disinflation materializes.