Business News

'The entire Sears business declined over time,' Whirlpool CEO lashes back

Key Points
  • Sears will no longer sell Whirlpool-branded appliances.
  • Whirlpool says discussions about ending the partnership between the two began in May.
  • Whirlpool will still manufacture some Kenmore-branded products for Sears.
Whirlpool Corporation Chief Executive Officer Marc Bitzer.
Pier Marco Tacca | Getty Images

Whirlpool is telling its side of the story, as the appliance maker cuts a century-old partnership with Sears Holdings.

"We informed Sears in May we would no longer supply Whirlpool brand products [if] we could not reach terms that were acceptable to both parties," Whirlpool Chief Executive Marc Bitzer said on a call Tuesday morning with analysts and investors.

"The entire Sears business declined over time," Bitzer added. Overall, he said Sears only accounts for about 3 percent of Whirlpool's global business — a "small fraction" when compared to other sources of revenue.

A representative from Sears didn't immediately respond to CNBC's request for comment regarding the conference call.

Bitzer confirmed that Whirlpool would continue to manufacture some Kenmore-branded products for Sears, as it has been doing for years.

In an internal memo to its employees, Sears cited a dispute over pricing as its reason for cutting ties with Whirlpool.

"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.

On Monday evening, Whirlpool reported third-quarter profits and revenue that missed analysts estimates. The Michigan-based appliance maker cited higher raw material prices in its earnings report and warned that those costs are expected to rise through 2018.

Whirlpool shares were falling more 10 percent Tuesday morning.

Bank of America and RBC Capital Markets both reacted by downgrading the stock.

"We are ... not satisfied with our operating margins, which were impacted by raw material inflation, unfavorable price/mix and slow progress on our European integration," Bitzer added in a statement.

"Thus, we are implementing strong actions to deliver our long-term goals, including recently-announced global cost-based price increases and a fixed cost reduction initiative," he said.

Over time, the market for appliances has become increasingly competitive, with players ranging from J.C. Penney to Best Buy to Amazon itching for a share.

Once recognized as the go-to destination for dishwashers and refrigerators, Sears gave up an estimated $1 billion in major appliance sales in 2015, according to analysis by Twice and The Stevenson Co. More recent data wasn't immediately available.

WATCH: Sears cuts century-old ties with Whirlpool

Sears cuts century-old ties with Whirlpool: WSJ