“We have found that appliance markdowns are now well above the levels seen in the last two years and are now even above pre-pandemic levels,” Bank of America analyst Elizabeth Suzuki wrote in a new client note on Wednesday.
Suzuki’s research reveals that promotions — or the percentages off the original prices — for appliances ranging from $500 to $5,000 at Home Depot averaged about 14% in March. That marks an increase from a 9% average promotion seen in March 2022.
CHICAGO, IL – MARCH 24: A customer shops for appliances at a Home Depot store on March 24, 2015 in Chicago, Illinois. (Photo by Scott Olson/Getty Images)
What could be more alarming to investors is that promotions on big-ticket items in all categories sold at Home Depot are running above 2019 levels year-to-date, according to Suzuki’s research.
Over at Best Buy, appliance promotions were roughly 20% on average in March. A year ago, promotions clocked in at an average of 18%.
Meanwhile, the number of appliance categories offered on sale at Best Buy in 2023 (in other words, the breadth of promotions) is tracking above the average of the last three years, Suzuki noted.
“This is likely a reflection of softening demand and increasing inventories,” Suzuki said.
To that end, sales in the building materials and appliances category are down 1.7% year to date, per the latest retail sales report.
Appliance discounts pick up.
The weakness in big-ticket goods such as appliances reflects a few factors.
First, the higher cost of credit has made it much more expensive to purchase appliances that have been jacked up in price over two-plus years of inflation. The average credit card rate right now on a store card could be north of 20%, depending on the store and credit profile of the consumer.
Second, consumers continue to show a propensity to buy services like summer vacations as opposed to hard goods post-pandemic.
And lastly, the housing markdown slowdown at the hands of rising interest rates has dented appliance demand.
Existing home sales data for February showed a 22.6% year-over-year decline. Prices for those homes dropped 0.2% year over year. New home sales declined 19% in February versus the prior year.
“We foresee macro headwinds to slowly turn into tailwinds as the year progresses,” Whirpool CEO Marc Bitzer told analysts on an early February conference call. “Needless to say that it is difficult to predict the exact timing of the shift in the macro cycle, but we would expect this to happen towards late Q2 or early Q3.”
To combat the sales slowdown, Whirlpool (WHR) is looking to slash $800 million to $900 million in costs this year.
Investors are taking a wait-and-see approach to appliance stocks. Whirlpool stock is down 5.7% year to date despite those promised cost cuts, lagging the 7.5% advance for the S&P 500.
Home Depot’s stock is off by 7% on the year, while Best Buy has shed 6.9%. Lowe’s stock (LOW) is up slightly year to date.
Suzuki’s data suggests that patience is the right call on these appliance names.
Brian Sozzi is Yahoo Finance’s Executive Editor. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn. Tips on deals, mergers, activist situations or anything else? Email brian.sozzi@yahoofinance.com
TORONTO – Strength in the base metal and technology sectors helped Canada’s main stock index gain almost 100 points on Friday, while U.S. stock markets also climbed higher.
The S&P/TSX composite index closed up 93.51 points at 23,568.65.
In New York, the Dow Jones industrial average was up 297.01 points at 41,393.78. The S&P 500 index was up 30.26 points at 5,626.02, while the Nasdaq composite was up 114.30 points at 17,683.98.
The Canadian dollar traded for 73.61 cents US compared with 73.58 cents US on Thursday.
The October crude oil contract was down 32 cents at US$68.65 per barrel and the October natural gas contract was down five cents at US$2.31 per mmBTU.
The December gold contract was up US$30.10 at US$2,610.70 an ounce and the December copper contract was up four cents US$4.24 a pound.
This report by The Canadian Press was first published Sept. 13, 2024.
OTTAWA – Statistics Canada says wholesale sales, excluding petroleum, petroleum products, and other hydrocarbons and excluding oilseed and grain, rose 0.4 per cent to $82.7 billion in July.
The increase came as sales in the miscellaneous subsector gained three per cent to reach $10.5 billion in July, helped by strength in the agriculture supplies industry group, which rose 9.2 per cent.
The food, beverage and tobacco subsector added 1.7 per cent to total $15 billion in July.
The personal and household goods subsector fell 2.5 per cent to $12.1 billion.
In volume terms, overall wholesale sales rose 0.5 per cent in July.
Statistics Canada started including oilseed and grain as well as the petroleum and petroleum products subsector as part of wholesale trade last year, but is excluding the data from monthly analysis until there is enough historical data.
This report by The Canadian Press was first published Sept. 13, 2024.
TORONTO – Canada’s main stock index was up more than 150 points in late-morning trading, helped by strength in the base metal and energy sectors, while U.S. stock markets were mixed.
The S&P/TSX composite index was up 172.18 points at 23,383.35.
In New York, the Dow Jones industrial average was down 34.99 points at 40,826.72. The S&P 500 index was up 10.56 points at 5,564.69, while the Nasdaq composite was up 74.84 points at 17,470.37.
The Canadian dollar traded for 73.55 cents US compared with 73.59 cents US on Wednesday.
The October crude oil contract was up $2.00 at US$69.31 per barrel and the October natural gas contract was up five cents at US$2.32 per mmBTU.
The December gold contract was up US$40.00 at US$2,582.40 an ounce and the December copper contract was up six cents at US$4.20 a pound.
This report by The Canadian Press was first published Sept. 12, 2024.
