The drag that the Hoover floor-care division has been on Maytag's (NYSE:MYG) results is well-documented on this site and elsewhere. Investors have been forced to wait, while the company prepares new products in hopes of rejuvenating the operation.
In the meantime, the rest of the appliance maker is performing well. Maytag released Q4 results yesterday, and the its home appliance sales were up 12.8%, to $1.22 billion, while commercial appliances improved revenues 13.1%, to $48.3 million. Home appliances turned in a sizable jump in operating income, while commercial appliances turned in a slim operating loss for the quarter (though it managed a full-year profit).
Companywide, operating income fell for the year. Management is putting this squarely on the shoulders of the floor care division. The unit's suffered in recent years, as competitors move production overseas and then apply cost savings to drop prices. Hoover's lagged behind in implementing similar changes, which was more damaging in a slow-growth market.
While Hoover has worked to improve its cost structure, the division nevertheless still bleeds red ink. Now, investors have to hope that the planned introduction of a new line of Hoover products takes root and reestablishes the venerable brand in the floor-care sector.
The company's sales, operating performance, and free cash flow still looked pretty good lately. Even so, Maytag shares have lagged the S&P 500 over the last 12 months, even as they've steadily risen since last March. (Appliance competitors Whirlpool (NYSE:WHR), and Electrolux (NYSE:ELUX), not to mention General Electric (NYSE:GE), have all outperformed both Maytag and the index over that same period.)
Should the company get Hoover back on track, investors might look with even more favor at a profitable, growing, cash-producing Maytag.
Fools are talking about Hoover on our Maytag discussion board.
Dave Marino-Nachison owns General Electric. He can be reached at [email protected].
