Maytag appliances returning to Best Buy

By Karen Jacobs

ATLANTA (Reuters) - Whirlpool Corp. (WHR.N), the world's No. 1 appliance maker, said on Wednesday its Maytag appliances will return to Best Buy Co. (BBY.N) stores in May, breathing new life into the brand it acquired last year.

"We've been able to demonstrate to Best Buy that our strategy on innovation is breeding new growth," said David Swift, president of Whirlpool North America.

Swift said about 18 Maytag appliances will be available at Best Buy starting in May, which Whirlpool has tagged "Maytag month."

Best Buy stopped selling Maytag washers and refrigerators in early 2005, citing a consumer preference for other brands. At the time, Maytag was a publicly traded company struggling with high fixed costs and increased competition from foreign appliance makers such as LG Electronics (066570.KS).

"Our decision to bring Maytag back was really triggered by restored confidence in the commitment to the brand," said Lisa Smith, vice president of appliances for Best Buy.

In 2005, "consumers were not responding" to Maytag products, Smith added. "There was kind of a lack of innovation at the time and diminished commitment to marketing."

Best Buy, one of the four biggest U.S. appliance retailers, said it had no plans to remove other brands from its appliance department because of the Maytag return.

Despite market share losses in recent years, Maytag remains a consumer icon. A 2005 "power brand" ranking of U.S. consumer franchises by Home Furnishings News found that Maytag was in 12th place, down from 4th place 2 years earlier.

"If the Maytag brand did not already have a lot of equity with consumers, this strategy would be significantly more difficult to execute," Swift said.

Since the acquisition, Whirlpool has developed new Maytag products, such as the Epic front-loading washing machine.

To mark the 100th anniversary of the Maytag washer this year, Whirlpool unveiled the Maytag Centennial, a top-loading machine that has a traditional square shape and commercial features such as a stainless steel basket.

NEW PRODUCTS

Whirlpool, based in Benton Harbor, Michigan, is counting on demand for new products and savings from the $1.7 billion Maytag buyout to fuel earnings as the weaker U.S. housing market cools demand for appliances.

It expects cost savings of more than $400 million by 2008 as it closes Maytag plants and makes appliances more efficiently. Whirlpool also acquired the Jenn-Air and Amana brands in the March 2006 purchase.

"People have understood that there are significant cost savings," said Morgan Keegan analyst Laura Champine.

"What people have been skeptical about is whether or not Whirlpool can take share by owning the Maytag brand," she said. "This (Best Buy announcement) helps them prove that point."

In February, Whirlpool said higher metals costs and softer appliance demand in North America, its biggest market, could hurt results this year. Analysts expect profit of $8.07 a share for 2007, up from $5.51 a share in 2006, according to Reuters Estimates.

Earlier this month, Whirlpool named a new Maytag repairman for its television commercials after an extensive nationwide search. The new repairman will "create some reinvigoration and excitement around the brand," Best Buy's Smith said.

At Best Buy, appliance sales at stores open at least 14 months rose 0.5 percent in the quarter ended March 3. Appliances accounted for 7 percent of Best Buy's revenue for the year ended in March, up from 6 percent in the previous year.

Whirlpool shares were down a penny to $87.79 in morning trading on the New York Stock Exchange, while Best Buy was down 22 cents to $47.24. Whirlpool shares have risen 6 percent this year, while Best Buy shares are off about 9 percent.