One Wall Street firm is concerned that rising washing machine prices as a result of the Trump administration's tariffs are weighing on Whirlpool's unit sales.
Credit Suisse downgraded the home appliance manufacturer to neutral from outperform on Wednesday, citing a decline in shipments as reported by an industry trade organization. While manufacturers have marked up all appliances an average of 5.4 percent this year, the majority of the gains are in laundry, with washing machine prices up 13.4 percent and dryers up 13.1 percent since January.
Analyst Susan Maklari noted that home improvement retailer Home Depot during a recent call cited recent laundry sales in a reference to the impact of tariffs. It now expects unit volumes to slow in the near term as industrywide price hikes take effect.
"We will be closely watching consumers' reactions to these increases to determine any adverse impact to revenues," Maklari wrote. "Although we acknowledge choppiness in 2018 given recent shifts in the appliance industry, this contrasts with underlying macro strength, including residential remodel activity. Looking ahead, we could see December shipments rise due to pre-buying ahead of price increases and tariffs."
Figures reported by the Association of Home Appliance Manufacturers trade organization show that shipments of major appliances have declined 3.8 percent year over year across the industry, despite an easy comparison: Shipments had fallen 1.3 percent in October 2017.
The decline in shipments comes almost a year after President Donald Trump's administration announced it would impose a 20 percent tariff on the first 1.2 million imported large residential washing machines in the first year and a 50 percent tariff on machines above that number. The tariff also included a tax on machine parts, which could drive some costs higher for domestic manufacturers as well.