Whirlpool (WHR) shares fell after the appliance maker cut its full-year guidance despite reporting third quarter results that beat estimates. CEO Marc Bitzer tells Yahoo Finance Live that while there is still demand from consumers who are looking replace their appliances, the decline in discretionary consumer spending "hurts" the company. He noted Whirlpool relies heavily on consumer confidence, mortgage rates, and housing, but "there is not a lot of momentum coming from these three elements right now."

Bitzer notes promotional activity has returned to pre-pandemic levels, but came that that normalization came a little bit earlier than anticipated. Despite stabilization in the promotional activity, Bitzer says, "the discretionary side of consumer demand has been soft, and everybody's chasing the same consumer and that's what we see reflect in the marketplace."

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Video Transcript

- Marc, it's great to have you here. Let's talk about some of the trends that you're seeing from the consumer, right. We are seeing a lot of pressure on shares today. A lot of that being attributed to the Real Vision that you made for your full-year guidance. But what is the-- I guess, what is your assessment on the health of the consumer right now?

MARC BITZER: Yeah. So first of all, thanks for having me. You know, obviously we reported today, Q3 results, which year-over-year we, posted one point of EBIT margin expansion. We had revenue growth. And we picked up market share. Yet at the same time, as you indicated, we trimmed our full year EBIT guidance to basically reflect the current market environment.

Which leads me to your question about the broader consumer sentiment. What we see-- on one hand, is actually very strong consumer sector. That's for replacement demand. Consumers replacing just a failed or broken down appliance. What is soft is the discretionary side. And that is ultimately-- we know that our business is strongly influenced by consumer confidence, mortgage rates, and housing, and there's not a lot of momentum coming out of these three elements right now.

So the discretionary side is soft, and that hurts us on the mix. And that hurts us overall volume in the business.

- Marc, Brian here. Always great to get some time with you. And look, I give you high marks. You and your CFO, Jim Peters, very transparent on that earnings call this morning. Talk to us about the promotional environment. Given what you just said on demand and interest rates, do you have to pick up more promotions to move the units that you need to move?

MARC BITZER: Yeah, Brian, I mean, we talked quite a bit about the promotion environment. And basically, the way I would simply characterize it is we're basically back to a pre-COVID, what I call, normalized promotion environment. So in terms of a depth and also duration of certain promotions, we're essentially fully back to a pre-COVID.

To be transparent, we expected this to occur maybe one or two quarters later. It now happened already in Q3. But we don't see it going beyond this one. And we actually see, right now, a stabilization of that promotion environment.

The reason why it probably came a little bit earlier is-- coming back to my earlier point-- the discretionary side of consumer demand has been soft, and everybody's chasing the same consumer. And that's what we see reflected in the marketplace.

But we know how to operate in that environment. That was pre-COVID, and we did very well. And we also, even in this quarter, we expanded share and margin, and we continue to intend to do that.

- What are you hearing from your partners on the housing front, Marc, where you've got these new homes that are being built out and they're giving Whirlpool a call, or already contracted to put a Whirlpool-- any of the inventory, or any of the systems-- of course, I love a great Jacuzzi as much as the next person purchasing a new home. But what are you hearing from them as they're completing some of the homes that they have in backlog, and even the new orders that are coming in, that gives you an insight into where the home buyer mindset is right now?

MARC BITZER: Yeah, I mean, for probably lack of a better analogy, I would call, right now, my housing market, Dr. Jekyll and Mr. Hyde. And the reason why I'm saying this is you have two sides. The new housing-- you all have seen, the order intake is solid because there's a structural demand-- strong demand for new housing. But keep in mind, any new order housing, which we see more builder site, that translates into an appliance sale only 8 to 10 months down the road. That's how long it takes to build the house.

The other side is existing home sales, which is a very, very big part of our overall demand. And existing home sales, as you all seen are now sub 4 million, you have to go back all the way back to 2010. So you have this odd situation where you have a structural undersupply of a market, which drives positive on new home. But right now, there's just not enough existing homes on the inventory to turn around because everybody's afraid of losing attractive mortgage rates, et cetera.

So these are two very, kind of, opposing trends right now. Over time and the long term, we say that repeatedly, we're very bullish on the mid and long-term US housing. US housing has been undersupplied by 2 or 3 million units. And at one point, the market will rebalance.