U.S. consumers are facing higher prices for appliances with retailers raising prices this month to offset rising raw material costs.
Sears, Roebuck(S.N: Quote, Profile, Research) , the dominant U.S. seller of home appliances, said it boosted prices this week.
“Commodity prices have risen and the cost from our suppliers has gone up,” said Sears spokesman Ted McDougal. The increases “are pretty much across the country, but we’re not treating them as permanent.”
Late last year, major appliance makers, including Whirlpool Corp. (WHR.N: Quote, Profile, Research) , Maytag Corp. (MYG.N: Quote, Profile, Research) and Sweden’s Electrolux (ELUXb.ST: Quote, Profile, Research) said they would seek price increases of at least 5 percent. The planned increases buck a trend of declining appliance prices over the past few years.
In addition, analysts say other retail chains and independent sellers are also moving to raise appliance prices.
The price increases could provide some relief for the appliance companies, which are starting to see costs of steel and other materials eat into profits. In recent days, FTN Midwest Research analyst Eric Bosshard raised his rating on Whirlpool to “buy” from “neutral,” saying the early success in raising prices could enhance earnings.
“We are comfortable that significant price increases will stick throughout 2005,” Bosshard said in a research note.
Carl Bridgers, a sales manager at Island Appliance in Wilmington, North Carolina, an independent retailer that is raising prices, doesn’t expect a marked decline in demand for washing machines or refrigerators because of the current price increases.
“Appliances are a necessity,” Bridgers said. “Everybody’s having to (raise prices) and I don’t think it’s going to be a hit to the consumer,” he said.
Keith McLoughlin, president and chief executive of Electrolux Home Products for the Americas, said his company implemented a “modest price increase” this year. Electrolux makes Frigidaire appliances.
But McLoughlin added that consumers are willing to spend more for appliances, especially high-end products.
“Consumers are excited about the numerous innovations and features that we introduced to the marketplace (and) are willing to pay for these innovations,” McLoughlin said in a statement.
From Reuters