Sears Holdings Corp. (NASDAQ: SHLD) announced plans to cut ties with Whirlpool by no longer selling their products which include KitchenAid, Maytag, and Jenn-Air subsidiaries. Whirlpool products will be sold in Sears facilities until inventory is “depleted” while Whirlpool will continue to manufacture items for Sears’ Kenmore nameplate. Following the news, Whirlpool shares dropped almost 10% and reported worse than expected third quarter earnings. The manufacturer expected to earn $11.10 to $11.40 per share for this year which was down from a prior prediction of $12.40 to $12.90 a share.
Increasing raw material costs and unfavorable price/mix has been weighing heavily on Whirlpool’s margins. Their total sales to Sears was trending to almost 3% of global sales and branded business only represented a very small portion of that overall business.
Sears is looking to push other top brands for appliances like Samsung, GE, LG, Frigidaire, Bosch, and Electrolux. The company also made a deal with Amazon in July to sell Kenmore branded products, some even with Alexa capabilities, on Amazon’s website. Shares of the retailer fell almost 30% this year.