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A Century Old Relationship Ends In Tears

24 October 2017 by lberuti

WHR ( Whirlpool Corporation ) got punished today for missing analysts’ forecasts with third quarter profits. Despite sales rising to $5.42bln – up from $5.24bln last year -, earnings per share fell short 7cts short of expectations at $3.83. The company also lowered its full year projection to $13.6 to $13.9, down from $15. The outlook for the full year 2017 renewed concerns that WHR struggles to integrate Indesit SpA - in which it bought a majority stake roughly 3 years ago – and cannot keep its costs in check. To add insult to injury, it also emerged that Sears has decided to end a century-long partnership and will stop stocking products from Maytag, KitchenAid and Jenn-Air. The retailer balked at paying WHR higher prices, arguing that it would no longer be able to sell Whirlpool products at a competitive price if it acquiesced to the latest demands from the white good maker. WHR’s stock took a bath and was down 10%, while its 5-year risk premium shot up 7bps to 70bps.