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Electrolux Falters On Weak U.S. Majap Market

4/28/2008 02:54:00 PM Eastern

Stockholm, Sweden — The world’s No. 2 majap maker posted a first-quarter loss due to ongoing weakness in the U.S. white-goods market.

Electrolux reported a net loss of approximately $17 million for the three months, ended March 31, while net sales slipped 3 percent to $3.9 billion.

The company attributed the loss, its first in more than two years, to a number of one-time charges and a “sharp decline” in the U.S. market.

The North American division, which accounts for nearly one-third of total revenue, posted an operating loss of $24.8 million and a 15.6 percent decline in net sales to $1.2 billion.

Operating income was impacted by the lower sales volumes, lower capacity utilization at the company’s U.S. and Mexican factories, and by a $19.3 million marketing outlay to support the U.S. launch of the premium Electrolux line earlier this month.

The company said the new line received “good market acceptance” and exceeded expectations by hitting more than 1,500 retail floors, including all Best Buy stores. Electrolux said the program was developed to provide “a significant long-term presence in the [U.S.] premium segment,” which is considerably more profitable than the mass market tier where its Frigidaire brand currently holds court.

However, marketing-related launch costs, including a TV campaign featuring talk-show host Kelly Ripa, will continue to have a negative impact on operating income for the remainder of the calendar year, the company said.