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Whirlpool (WHR) Gains from Effective Cost-Reduction Efforts
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Whirlpool Corporation (WHR - Free Report) is focused on enhancing supply-chain initiatives and accelerating cost-takeout actions. These efforts were part of a broader strategy to improve operational efficiency and reduce costs across the board. As a result of these initiatives, the company was able to gain market share in almost all its major businesses.
In the third quarter of 2023, Whirlpool realized a cost-takeout benefit of $300 million. This indicates a strong focus on cost efficiency and these measures contributed to a year-over-year margin expansion of 100 basis points (bps) and led to a solid EBIT margin of 6.5% in the third quarter.
The company also benefited from favorable trends in raw materials, particularly in steel and trade rates. These trends are expected to continue and provide additional tailwinds for the company's cost-saving efforts. It is on track to deliver more than $800 million in cost reductions in 2023.
Image Source: Zacks Investment Research
Strategic Initiatives Bode Well
Whirlpool's strategic actions, including the transaction with Arcelik in Europe, are expected to unlock significant value. This move indicates a focus on strategic partnerships and market optimization. Such initiatives are likely to enhance the company's global footprint and operational efficiency, positioning it well for future opportunities.
The partnership with Arcelik is expected to unlock significant value for Whirlpool, largely coming from an annual increase of $250 million per year in the free cash flow and a margin expansion of 150 bps. The transaction is likely to close by April 2024.
Strong Regional Performance
In North America, Whirlpool achieved mid-single-digit revenue growth in the third quarter. Growth was attributed to improved supply-chain execution, product introductions, resilient replacement and builder demand. Additionally, the acquisition of InSinkErator and strong cost actions contributed to this growth.
In Latin America, Whirlpool saw strong share gains and industry recovery, particularly in Mexico and Brazil. The region reported a significant increase in net sales, with 14.3% year-over-year and 5% sequential growth in the third quarter.
Challenges in Discretionary Purchases
Discretionary purchases have been weaker than anticipated due to increased mortgage rates and low consumer confidence. In the third quarter, the company particularly witnessed soft demand trends across Asia and Europe due to negative consumer sentiment.
Additionally, top-line performances across North America and Asia were impacted by an unfavorable price/mix. Net sales in Asia fell 11.2% year over year and 22.4% sequentially in the third quarter.
Shares of this Zacks Rank #3 (Hold) company have lost 9.7% in the past three months compared with the industry’s decline of 10.1%.
3 Hot Stocks to Consider
We have highlighted three better-ranked stocks, namely G-III Apparel Group, Ltd. (GIII - Free Report) , lululemon athletica inc. (LULU - Free Report) and American Eagle Outfitters Inc. (AEO - Free Report) .
The Zacks Consensus Estimate for G-III Apparel Group’s current fiscal-year sales suggests growth of 33% from the year-ago reported figures. GIII has a trailing four-quarter earnings surprise of 541.8%, on average.
lululemon is a yoga-inspired athletic apparel company that creates lifestyle components. It presently carries a Zacks Rank #2 (Buy).
The Zacks Consensus Estimate for lululemon’s current fiscal-year sales and earnings suggests growth of 18.2% and 22.9%, respectively, from the year-ago reported numbers. LULU has a trailing four-quarter earnings surprise of 9.2%, on average.
American Eagle Outfitters is a specialty retailer of casual apparel, accessories and footwear for men and women. It currently has a Zacks Rank #2.
The Zacks Consensus Estimate for American Eagle Outfitters’ current fiscal-year earnings and sales indicates growth of 39.2% and 4%, respectively, from the previous year’s reported numbers. AEO has a trailing four-quarter average earnings surprise of 23%.
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Whirlpool (WHR) Gains from Effective Cost-Reduction Efforts
Whirlpool Corporation (WHR - Free Report) is focused on enhancing supply-chain initiatives and accelerating cost-takeout actions. These efforts were part of a broader strategy to improve operational efficiency and reduce costs across the board. As a result of these initiatives, the company was able to gain market share in almost all its major businesses.
In the third quarter of 2023, Whirlpool realized a cost-takeout benefit of $300 million. This indicates a strong focus on cost efficiency and these measures contributed to a year-over-year margin expansion of 100 basis points (bps) and led to a solid EBIT margin of 6.5% in the third quarter.
The company also benefited from favorable trends in raw materials, particularly in steel and trade rates. These trends are expected to continue and provide additional tailwinds for the company's cost-saving efforts. It is on track to deliver more than $800 million in cost reductions in 2023.
Image Source: Zacks Investment Research
Strategic Initiatives Bode Well
Whirlpool's strategic actions, including the transaction with Arcelik in Europe, are expected to unlock significant value. This move indicates a focus on strategic partnerships and market optimization. Such initiatives are likely to enhance the company's global footprint and operational efficiency, positioning it well for future opportunities.
The partnership with Arcelik is expected to unlock significant value for Whirlpool, largely coming from an annual increase of $250 million per year in the free cash flow and a margin expansion of 150 bps. The transaction is likely to close by April 2024.
Strong Regional Performance
In North America, Whirlpool achieved mid-single-digit revenue growth in the third quarter. Growth was attributed to improved supply-chain execution, product introductions, resilient replacement and builder demand. Additionally, the acquisition of InSinkErator and strong cost actions contributed to this growth.
In Latin America, Whirlpool saw strong share gains and industry recovery, particularly in Mexico and Brazil. The region reported a significant increase in net sales, with 14.3% year-over-year and 5% sequential growth in the third quarter.
Challenges in Discretionary Purchases
Discretionary purchases have been weaker than anticipated due to increased mortgage rates and low consumer confidence. In the third quarter, the company particularly witnessed soft demand trends across Asia and Europe due to negative consumer sentiment.
Additionally, top-line performances across North America and Asia were impacted by an unfavorable price/mix. Net sales in Asia fell 11.2% year over year and 22.4% sequentially in the third quarter.
Shares of this Zacks Rank #3 (Hold) company have lost 9.7% in the past three months compared with the industry’s decline of 10.1%.
3 Hot Stocks to Consider
We have highlighted three better-ranked stocks, namely G-III Apparel Group, Ltd. (GIII - Free Report) , lululemon athletica inc. (LULU - Free Report) and American Eagle Outfitters Inc. (AEO - Free Report) .
G-III Apparel Group is a manufacturer, designer and distributor of apparel and accessories. The company currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for G-III Apparel Group’s current fiscal-year sales suggests growth of 33% from the year-ago reported figures. GIII has a trailing four-quarter earnings surprise of 541.8%, on average.
lululemon is a yoga-inspired athletic apparel company that creates lifestyle components. It presently carries a Zacks Rank #2 (Buy).
The Zacks Consensus Estimate for lululemon’s current fiscal-year sales and earnings suggests growth of 18.2% and 22.9%, respectively, from the year-ago reported numbers. LULU has a trailing four-quarter earnings surprise of 9.2%, on average.
American Eagle Outfitters is a specialty retailer of casual apparel, accessories and footwear for men and women. It currently has a Zacks Rank #2.
The Zacks Consensus Estimate for American Eagle Outfitters’ current fiscal-year earnings and sales indicates growth of 39.2% and 4%, respectively, from the previous year’s reported numbers. AEO has a trailing four-quarter average earnings surprise of 23%.