Please ensure Javascript is enabled for purposes of website accessibility

Whirlpool Expects to Rack Up $280 Million in Restructuring and Severance Costs

By Rhian Hunt – Jul 2, 2020 at 4:39PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

It has not yet said how many workers will be laid off.

Home appliance company Whirlpool (WHR -2.04%) announced this week in an SEC filing that it expects to pay between $260 million and $280 million in restructuring costs this year, including severance pay for terminated workers. The new figure updates and replaces a previous estimate of $100 million in total restructuring expenses that the company provided earlier in the year.

Though Whirlpool and other home appliance companies saw a spike in sales of many appliance types during the first wave of the COVID-19 outbreak, the manufacturer is still feeling the effects of the pandemic. Whirlpool earlier launched cost-cutting initiatives such as limiting business travel, furloughing employees, and encouraging voluntary retirements.

Hand crossing out people's silhouettes on a board

Image source: Getty Images.

However, according to a company representative, Whirlpool deems it is "now also necessary to take additional action and reduce the number of people we employ in the U.S." The representative went on to say that the decision is "necessary to adapt to the reality of an economic contraction and prepare us for new ways of working in the future."

Whirlpool has not yet said how many employees will be terminated as a result of the new decision. The spokesperson also said those affected "are being offered a strong severance package." According to the SEC filing, severance pay amounts to roughly one third of the $280 million in restructuring costs, adding up to around $95 million.

Whirlpool notes it "expects substantially all of the costs to result in cash expenditures in 2020," and anticipates all of the job cuts and other measures to be fully completed this year. The company's stock is trading slightly more than 2% higher today following the announcements.

Rhian Hunt has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Whirlpool Corporation Stock Quote
Whirlpool Corporation
$134.81 (-2.04%) $-2.81

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 09/30/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.