Increasing prices was the only option in the current market, Sunbeam CEO, Karen Hope, told Appliance Retailer this morning.
Hope was responding to the announcement by GUD CEO Johnathon Ling last week that Sunbeam will raise prices across its appliance range in February by an average of 8%, its biggest price hike ever.
Hope said some products will cost more and some less, but on average the 8% increase will apply to most SKUs following a detailed review.
And the primary reason is the falling dollar which has depreciated by 15% to 20% – a major contributor for the decline in profitability, Hope said.
“Our sales went up year-on-year by 1% but where we suffered was because of margin and the reason margins were low were because cost of purchase was higher as a result of adverse currency. The reality is that when currency depreciates to the extent it has wholesaler margins are not enough to accommodate all of that devaluation. So at the end of the day price increases have to take place.”
There has however been some good news for Sunbeam with strong Christmas sales coming from the company’s first multi capsule coffee machine and Marc Newson design kettles and toasters. “The Food Saver category also continues to show strong growth too,” Hope said.
But it is the electric blanket business where Sunbeam is looking for some winter warmth. After losing the account in 2014, Sunbeam will return to Big W and Woolworths shelves this winter, with a new Sunbeam range in addition to a Private Label line.
“We are market leader in electric blankets and Big W recognises this and we are pleased to regain our relationship with the company,” Hope said.