Sears cuts century-old ties with Whirlpool

Sears cuts century-old ties with Whirlpool  11:58 AM ET Tue, 24 Oct 2017 | 00:53

Sears Holdings is cutting its century-old ties with Whirlpool and will no longer sell the company’s products, which include Maytag, KitchenAid and Jenn-Air subsidiaries, according to an internal Sears memo sent to stores last week. The memo was reviewed by CNBC.

“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,” Sears wrote to its employees.

The Wall Street Journal first reported on the news Monday evening.

Sears said it plans to sell Whirlpool-branded products in its facilities until inventory is “depleted.” Meantime, Whirlpool will continue to manufacture items for Sears’ Kenmore nameplate, the companies have confirmed.

Department store chain Sears added that it will provide “tools and instructions” to its employees regarding how to deal with “excess inventory,” and how to move into its Kenmore or other appliance brands.

Whirlpool shares were down near 10 percent Tuesday morning.

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The Michigan-based appliance manufacturer on Monday evening reported worse-than-expected third-quarter earnings, and trimmed its financial outlook. Whirlpool said it expected to earn $11.10 to $11.40 per share for 2017, down from a prior forecast of $12.40 to $12.90 a share.

Whirlpool Chief Executive Marc Bitzer has cited rising raw material costs and “unfavorable price/mix” as weighing on the company’s margins.

“On May 1, Whirlpool Corporation informed Sears, consistent with our contract, that we will no longer supply them with our branded products effective October 27,” a Whirlpool spokeswoman told CNBC in a statement.

“Our total sales to Sears are trending to approximately 3 percent of our global sales, and our branded business represents a very small portion of that overall business,” she added. “We continue to supply our Kenmore products to Sears.”

The Upton Machine Company, which eventually became Whirlpool, sold its first washing machines to Sears in 1916. Sears later took a stake in the appliance company in 1921.

Moving forward, Sears said it will push its other top brands for appliances, which include LG, Samsung, GE, Frigidaire, Electrolux and Bosch. Sears also inked a deal with Amazon in July to sell Kenmore-branded appliances, some with Alexa capabilities, on

Earlier this year, Sears CEO Eddie Lampert took aim at the retailer’s vendors, saying: “We will not simply roll over and be taken advantage of — we will do what’s right to protect the interests of our company and the millions of stakeholders we serve.”

Sears went on to sue two of its Craftsman vendors in contract disputes, but the lawsuits have been resolved.