October Surprise For Core Appliance Categories: AHAM

Shipments for the big six fell 4 percent
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Home Depot appliance department

Higher appliance prices and a soft housing market took a toll on majap factory shipments in October.

The latest monthly wholesale tally from the Association of Home Appliance Manufacturers (AHAM) shows a 3.8 percent decline in unit volume year over year for the majap industry’s six core product categories, covering laundry, refrigeration, cooking and dishwashers.

By comparison, the so-called AHAM 6 was up 1.1 percent in September.

The greatest weakness was seen in washers — the target of stiff safeguard tariff-rate quotas that went into effect in February — with October shipments falling 12.7 percent from last year, to some 710,000 units. Dryers, in contrast, slipped 1 percent.

See: Trump OKs Tariffs On Washers

On a third-quarter conference call this month, Home Depot merchandising executive VP Ted Decker acknowledged the tariffs’ initial impact on laundry sales, but said the consumer has since moved past it. “We've right now cycled through that several months [and] our laundry sales and unit productivity is on par, if not slightly better, than the average of our overall appliance business,” he noted.

Elsewhere in the AHAM report, shipments of full-sized refrigerators declined 1.4 percent; the cooking category was essentially flat, slipping 0.2 percent; and dishwasher volume was up 2.4 percent.

Industry veteran John Riddle, president/CEO of the John Riddle Consulting Group, believes that despite a generally healthy U.S. economy, a convergence of four factors is driving the soft demand in home appliances: higher prices, stemming from tariffs and cost increases; a dip in housing starts, related in part to new limits on mortgage interest and property tax deductions; the current midpoint in the appliance replacement cycle; and stepped up purchasing early in the year as consumers sought to get the jump on price hikes.

Related: Electrolux Cites Sears, Trump Tariffs For Price Hikes

Riddle said the steeper appliance pricing follows “years of a deflationary trend that was driven by excessive discounting,” and isn’t necessarily unwelcome. “Long term, I think it’s a good thing,” he told TWICE in an email.

Still, Wall Street has its reservations. According to CNBC, Credit Suisse analyst Susan Maklari, citing majap price hikes of 5.4 percent on average this year and over 13 percent in laundry, said she will be “closely watching consumers’ reactions to these increases to determine any adverse impact to revenues.” In the meantime, she downgraded Whirlpool to “neutral” from “outperform,” citing the AHAM 6 decline.

Total October shipments, however, remained essentially flat at -0.1 percent, compared to a 0.4 percent slip in September. The full results were buoyed by a 668 percent spike in AC volume, as retailers presumably scrambled to get their orders in before a planned Jan. 1 tariff hike, from 10 percent to 25 percent, on a host of Chinese imports.

See: Schaefer’s Ron Romero Speaks Out On Tariffs

So far, total shipments year-to-date are down by 0.6 percent, the AHAM report showed.

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