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April 2, 2020

Stanley Black & Decker prepares layoffs, spending cuts; halts M&A activity

Photo | HBJ File Stanley Black & Decker CEO James Loree.

New Britain-based manufacturing heavyweight Stanley Black & Decker will pull back on acquisitions and reduce “non-essential” staffing, including through layoffs, amid sharp declines in its share price since the outbreak of the COVID-19 virus.

Stanley CEO James Loree said in an announcement Thursday morning that he's optimistic the company will pull through the current crisis, but it is making defensive moves to ensure that.

"We are in a strong position as we face today's challenges and are taking the necessary actions now to protect our employees and the business while positioning the company to thrive into the future," Loree said.

In addition to staff reductions "in a manner that ensures we are prepared for a demand recovery at the appropriate time," those measures include substantially reducing indirect spending (currently at $1.7 billion annually), adjusting the supply chain and labor base to match dwindling demand and taking advantage of raw material deflation.

The company will reduce non-essential staffing through a combination of furloughs, shortened work-weeks and "some staff reductions," Stanley spokeswoman Shannon Lapierre said. 

"We don’t have details to share at this point as plans are being developed, but the goal is to make the changes in a way that allows us to minimize the impacts to our workforce and also be able to position the company when the economy recovers. (i.e., bring employees back to full-time work when the economy recovers)," Lapierre said in an email.

Shares at Stanley fell more than 40% since a year ago, and the tools and related products industry has declined by the same percentage, according to Zacks Equity Research. The industry is in the bottom 8% of 250 industries Zacks tracks. As of Thursday morning Stanley's share price was $94.01.

That’s down about $73, or about 44% from Jan. 2, when Stanley's share price was $167.

Stanley will also press pause on acquisitions until the company's financial outlook is clearer as part of an effort to reduce capital spending. The manufacturer said its financial position remains study with strong credit ratings, substantial cash on-hand and $3 billion of revolving credit facilities backed by a well-capitalized, diversified bank group.

"We have stress tested our business for a wide variety of demand scenarios and have initiated the necessary actions and contingency plans to ensure we maintain a strong operational foundation and balance sheet during this unpredictable period," Stanley Chief Financial Officer Donald Allan Jr. said.

The company also announced it will hold its first quarter earnings call April 30.

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