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Maytag shares drop after profit warning


Shares of Maytag Corp. lost 16 percent of their value last Tuesday after the company said first-quarter profits and sales would fall short of expectations, largely because consumers are spending less when buying vacuum cleaners.

  The company, which in January said that profits for the period would be about 70 cents a share, didn’t give any updated expectations. In a statement, the Newton-based manufacturer said that the decline began in February “when operating earnings were about 25 percent below plan.”

  The company, which is the nation’s third-biggest maker of home appliances, said sales have dropped at its Hoover floor-care products division because of bad weather and slipping consumer confidence. Customers are choosing lower-priced models, the company said.  

Maytag had expected industry sales to be flat or increase slightly during the first two months of 2003. Instead, major appliance shipments were down about 4 percent industrywide, Chief Executive Ralph Hake said in the statement.

“Beginning in February 2003, we saw a behavior change as retail anxiety heightened, especially with discretionary purchases such as upright vacuum cleaners,” said Chief Executive Ralph Hake in a statement. “The magnitude of the impact on our business and how long weak conditions will last remain to be seen.”  

Maytag will continue to fund its pension plan and reduce debt and said it is committed to trimming costs. The company has announced plans to close a factory in Illinois and move some production to Mexico.

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