Power Tool Industry August 2021
Stanley Black & Decker
Q2 revenue rose 36.6% to $4.3 billion and organic revenue rose a record 33% overall. Tools & Storage delivered 46% revenue growth and 41% organic growth, with volume up 38%, currency up 5% and price contributing 3%.
Q2 Conference Call with Analysts:
The exceptional growth in Tools & Storage was realized across all their global markets, with organic growth of 30% in North America driven by strong professional demand and innovation.
Power Tools delivered 39% organic growth, benefiting from innovative product launches across Craftsman, Stanley FatMax and DeWalt, including DeWalt Power Detect, FlexVolt Advantage, Atomic and Xtreme.
They project that the FlexVolt brand, which is now 45 products, will represent $600 million in 2021 revenue. It is a key growth driver and they will continue to innovate and put more products into the pipeline.
They continue to see growth and share gain across their brick-and-mortar and ecommerce platforms in US retail, with the channel up 22% organically in the second quarter. POS was robust and retail inventories ended the quarter below normal levels. Retailers would love to have more inventory, but they are already operating their factories at full capacity. They are adding several plants this year and working on making sure they are securing all components far enough in advance from a supply chain perspective.
They are raising their forecast for organic growth for the year to 16% to 18% from prior forecasts of 11% to 13%. The primary driver is an improved outlook for Tools & Storage. They are raising their organic growth forecast for Tools & Storage to the low 20s versus prior estimates of 14% to 16%. That will deliver mid-to-high single digit organic growth in the second half.
It was the first time all three segments delivered double-digit organic growth in the same quarter. All regions also delivered double-digit growth.
They are investing across all their businesses to capitalize on the key trends that are driving growth, including consumers reconnecting with home and garden and the robust growth of ecommerce.
They are investing more than $200 million in innovation, ecommerce, sales and marketing and other areas in order to capitalize on these trends.
They expect key market drivers across their global tools markets will continue to drive demand and support tools growth for some time to come. It is possible the expansion of the Delta variant of coronavirus may actually limit some activities in the US and other countries and stimulate DIY activity for a period of time.
They are expanding their cordless product offerings up and down the power spectrum to new users and product categories with their flexible Flexvolt Advantage and DeWalt Power Detect platforms.
Their Atomic and Xtreme platforms leverage the smallest, most power-dense brushless motor technology in the industry to deliver the highest power to weight ratio available in compact 20V and 12V platforms. They will quadruple the product offerings across those platforms in the coming years. These platforms are already helping them gain market share.
The huge surge in demand and the shift to ecommerce during the pandemic proved to be an enormous advantage for them. They grew their global ecommerce business from 13% of tool sales to 18% in just 12 months, and it is now about a $2 billion channel. They estimate their share of the tools ecommerce business to be three times greater than their closest competitor’s.
They are involved in an intense battle for share with TTI/Techtronics Industries. TTI chose an exclusive strategy in the home center channel as well as a commercial and industrial strategy built on lots of feet on the street and a serious investment in sales and marketing resources.
Comparing DeWalt and Milwaukee, they believe DeWalt is a somewhat stronger brand, but not by much. Comparing Craftsman to Ryobi, the research shows that Craftsman is a much stronger brand.
They believe the shift in ecommerce will continue and they will be “doubling down” on their investments in talent, digital capabilities and in their brands.
They will be investing heavily in revitalizing the Black & Decker brand to drive it toward more youthful buyers as an ecommerce lifestyle brand.
Cordless outdoor products also represent a major opportunity for them with the emphasis on climate change and clean energy driving opportunity. They are currently in negotiations with MTD to exercise their option to acquire the remaining 80% of the company. They believe the acquisition would provide $200 million in annual organic growth over the medium-term.
They continue to see elevated commodity prices and expect $260 million of commodity inflation in the second half instead of the $210 million originally forecast. Much of the increase is being driven by rising prices for steel. They believe they will be able to offset about half of the 2021 headwinds, partially because they’ve been able to implement some price increases.
CEO Jim Loree joined the Council for Inclusive Capitalism. Launched in December 2020, the Council is a global nonprofit that joins moral and market imperative to build a more inclusive, sustainable and trusted economic system. Loree noted that SB&D believes that business has a vital role to play in building a better world and delivering sustainable value and societal good. The Council is led by CEOs and global leaders who commit their organizations to tactics that create long-term value and are accountable for their actions, which are measurable and made public on the Council’s online platform.
October is dedicated to Maker Month at SB&D. As part of their Maker Month initiative, SB&D established a scholarship program to support future trades professionals. In 2020 they created “31 Faces of Makers,” a series of individual profiles of tradespeople, one for each day of October. They are also partnering with Discovery Education to create resources so their employees can volunteer virtually to help students around the world with STEAM curriculum.
SB&D signed a multi-year partnership with the McLaren Formula 1 Racing Team and will become the Official Tools and Storage Partner.
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