End of a (Retail) Era: Sears and Whirlpool Part Ways

The Maytag Man will stop making appearances at Sears.

The national retailer said it will no longer sell Whirlpool brand products due to a pricing disagreement, according to reports. In addition to Maytag, Whirlpool manufactures Amana and Kitchenaid appliances, among other brands.

“Whirlpool has sought to use its dominant position in the marketplace to make demands that would have prohibited us from offering Whirlpool products to our members at a reasonable price,” an internal memo obtained by the Wall Street Journal and distributed to Sears employees reportedly reads.

The end of a long partnership

The sales partnership between Sears, based in Chicago, Illinois, and Whirlpool stretches back more than 100 years, when Whirlpool was known as Upton Machine Company. At the time, Sears took a stake in Upton, which gave it the capital to expand and ultimately become Whirlpool.

Sears, which launched in 1893 as catalogue company Sears, Roebuck & Co., was once the nation’s largest retailer, maintaining that position into the late 1980s. Whirlpool is one of the largest appliance manufacturers in the U.S., where it’s responsible for 35% of all sales for washers. It has been raising prices to cover the costs of raw materials, according to reports.

Tough times for Sears

Sears has struggled in recent years with declining sales as so-called brick and mortar stores have faced increasing competition from online sellers such as Amazon, as well as home supply discounters including Home Depot.

Sears’ stock price has fallen by nearly half in the past year, and it hasn’t had any revenue growth in close to a decade, Bloomberg reports. It has also closed hundreds of stores in the last year, including numerous Kmart locations, which are part of its business.

For its part, Whirlpool’s stock has decreased by 4% in the past year, but it has increased 72% over the last five years.

Here are more details:

Sears will sell Whirlpool products, which include Amana, Maytag, and Kitchenaid, until it runs out of inventory. It will instead focus on other appliance brands LG, Samsung, GE, Frigidaire, Electrolux, and Bosch, according to USA Today.

In order to stay afloat, Sears is in the middle of restructuring its business, which includes more than $1 billion in cost cutting, consolidation of business units, and debt reduction.

Sales to Sears made up only 3% of Whirlpool’s total revenue, according to the Wall Street Journal.

The stock of both companies fell following news of the break up.

Top Takeaways:

  • Sears will no longer sell Whirlpool products, due to a pricing disagreement, which Sears announced last week in an internal memo.
  • Sears has sold Whirlpool products, most famously its Maytag washers and dryers, for more than 100 years. It was reportedly the top seller of major appliances until 2002.
  • Sears has faced declining sales and stock price for years as it competes with online retailers and large home construction and furnishing companies including Home Depot.

Read More: What to Make of All the Layoffs in the Retail Industry

 






Author:
Jeremy Quittner is the financial writer for Stash.



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