Whirlpool (NYSE:WHR) layoffs are the talk of Wall Street today as the appliance giant announced it will cut about 1,000 salaried positions worldwide as part of a cost-cutting effort. The surprise job cuts have clearly hit home with investors, as WHR stock eyes an over 10% loss in early trading.
So, what do you need to know about these Whirlpool layoffs?
Well, despite just completing the first round of layoffs earlier this year, Whirlpool is already prepping for more job cuts, according to Chief Financial Officer Jim Peters. The CFO says the firings are coming as a result of sliding demand for homes in the U.S.
“The discretionary side that’s driven by existing home sales really has seen no pick up and no benefit yet,” Peters said in an interview, referring to U.S. real estate demand. “We’re simplifying our structure,” he added.
Reasonably so, mortgage applications, a proxy for housing demand, are down considerably from last year. With high interest rates and inflation eating away at many would-be homebuyers’ budgets, many simply aren’t buying homes — nor Whirlpool’s line of refrigerators, dishwashers, and washing machines.
However, Peters believes there’s evidence that some Americans are opting to remodel their homes instead of purchasing new ones, which should help its large appliance sales.
“We are starting to see some positive signs,” Peters said, referring to remodeling.
Whirlpool Layoffs Push WHR Stock Further Into the Red
Whirlpool, the owner of the Maytag and Amana brands, would like to cut about $400 million in costs this year, an initiative that has proven more difficult than expected.
Sales of large appliances dropped more than 8% in the first quarter compared to the year prior. This has pushed the company’s revenue down 3.4%, below analysts forecasts.
As part of this restructuring, Whirlpool is reducing its use of discounts and promotions while bolstering the sale of smaller, higher-margin appliances, including stand mixers, blenders, and its new automatic espresso makers.
With today’s drop, WHR stock is down 24% year-to-date, while the S&P 500 has climbed 5.5% over the same period.
On the date of publication, Shrey Dua did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
