Yahoo Finance Are home appliance shortages nearing an end?
There is light at the end of the tunnel on the major appliance shortage triggered by the COVID-19 pandemic shutting down key component-making factories in China in 2020.
At least when it comes to Whirlpool (WHR) appliances.
“Our backlog is still at the level it was at the end of the third quarter, about eight weeks. We have been able to ramp up production to keep in line where the current demand levels are. We expect to work through most of that backlog by the end of the second quarter,” Whirlpool CFO Jim Peters told Yahoo Finance Live.
The appliance industry has been hammered by a crush of demand throughout the pandemic, reflecting two factors.
First, with people quarantined in their homes they have decided to upgrade appliances to more energy efficient or better looking ones. Second, the pandemic has caused people to flee cramped city apartments for larger homes out in suburbia. That has meant buying a new home or an existing home — in either case, it likely has equated to some form of orders for appliances.
Taken together, the dynamics have forced consumers to wait for weeks to receive their orders as factories ramp back into gear. Some popular models (as this writer could attest from a summer kitchen remodel) have simply been out of stock with no projected availability date.
Despite the shortages, Whirlpool managed to cook up a solid fourth quarter and outlook.
Whirlpool’s fourth quarter organic sales rose 10.3% from the prior year. North America, Europe and Latin America all showed sales growth. Sales in Asia fell slightly. For 2021, Whirlpool sees net sales growth of 6% and an adjusted EPS increase of 5.1% at the mid-point of its outlook ($19.00 to $20.00 a share).
Explains Peters, “We are optimistic about demand not just in the near- to mid-term, but the longer-term. Some of the drivers we are seeing are the positive growth within housing, not just new home construction but also you are seeing strong existing home sales. Then with consumers continued focus on the home and nesting, what we are seeing is more home renovations where people are investing in their kitchens that they have been spending more time in. We continue to see that trend gaining steam.”
Brian Sozzi is an editor-at-large and anchor at Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn.
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