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July 29, 2022

Amid economic headwinds, Stanley Black & Decker to slash $1B in costs by end of 2023

Stanley Black & Decker, Inc. CEO Donald Allan Jr.
By Skyler Frazer

Stanley Black & Decker’s stock price was down about 15% this week through Thursday as the New Britain tools manufacturer missed analysts’ second quarter revenue estimates.

In response to challenging economic headwinds, Stanley announced plans to implement a significant cost-cutting initiative that will slash expenses by up to $200 million by the end of this year, $1 billion by the end of next year and $2 billion within three years.

Part of the cost-saving measures will include consolidating the company’s 120 manufacturing facilities by at least 30% and “streamlining and simplifying the organization,” Stanley said. 

It’s not clear if that will include layoffs. 

Stanley Black & Decker President & CEO Donald Allan Jr. said inflation, rising interest rates and significantly slower demand in late May and June were major headwinds.

"Against that backdrop, the entire organization is focused on taking the necessary steps to reduce our inventory to generate cash flow, and to resize our cost base through corporate simplification, operational optimization and supply chain transformation,” he said. “We are reprioritizing investments across our businesses and shifting resources to where we expect they will have the greatest positive impact for our customers, partners and end users. We believe these actions will ultimately create a more agile organization that can adeptly navigate the dynamic operating environment and improve our responsiveness to customer demands."

Stanley, which was buoyed during the pandemic by a boom in do-it-yourself projects as more Americans remained at home during the public health crisis, on Thursday significantly cut its 2022 earnings projections to $5 to $6 per share from $9.50 to $10.50 per share. 

It also reported an 80% decline in second-quarter profits to $87.6 million, or 57 cents per share. Despite that decrease, revenues were up 16% from last year on the heels of outdoor power equipment acquisitions.

The company said in July it closed on the sales of its Stanley Security and Access Technologies businesses, yielding $4.1 billion in revenue. The company also highlighted its recent agreement to sell its oil and gas business.
 

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