As Sears starts to load up its shelves for the holiday season with all that new debtor-in-process-financed inventory, there’s one category that may be severely underrepresented on its selling floor: major appliances.
According to published reports Whirlpool has sent a letter (wouldn’t you like to have been cc-ed on that one?) to Sears demanding that it return any of the shipments it sent to the retailer in the 45 days before it filed bankruptcy.
Whirlpool claimed all sorts of legal reasons why the request was valid but the basic intent is pretty clear: We don’t want you to blow out our appliances at crazy prices this Christmas to help your cash flow, and we don’t like that you’ll never pay us what these are worth.
The giant appliance manufacturer – which also owns the KitchenAid, Maytag and Amana brands, among others – has historically been the largest private label supplier to Sears, selling products under the Kenmore label. That’s been the flagship of Sears’ major appliance business for generations.
Whirlpool can’t be happy with its Sears business these days. While it says the retailer only represents less than 2% of its overall business, it took a $23 million hit when Sears went bankrupt, making it one of the largest trade creditors. Usually, when a retailer files bankruptcy and after the big secured creditors get their cut, there is very little left for a store’s suppliers. It often amounts to pennies on the dollar.
YOU MAY ALSO LIKE
Whirlpool’s attempt to regain its merchandise – as yet not acted upon by Sears as best as anyone can figure out –will be one of many disruptions we’re likely to see over the next 60 days in the wonderful world of retailing.
Usually large national retailers file bankruptcy in the first or second quarter of the year, after they have taken in as much as they can during the holiday season and before the bills for all those goods have to be paid. It’s a formula we’ve seen many times, most recently with Toys “R” Us and Bon Ton.
What we haven’t seen much of is a big chain running a bankruptcy-driven sale during Christmas. Desperate for cash and with a fresh supply of goods coming in the back loading dock door thanks to its new credit line, retailers like Sears have the ability to truly disrupt the usual shopping patterns in the fourth quarter.
We can expect to see all kinds of screwy promotions, brands out of place and pricing that defies conventional retailing logic.
Whirlpool may never get its dishwashers back. But some lucky shoppers are likely to pick up a few real bargains this Christmas, proving that this holiday season especially, one person’s Ho Ho Ho is another’s Bah Humbug.