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Stanley, Black & Decker Q1 Sales fell 12% to $3.9 billion as higher prices were more than offset by an 11% decline in volume. A 2% hit from currency and a 1% decline from their oil and gas divestiture accounted for the rest. Q1 Conference Call with Analysts: CEO Don Allen was joined by new CFO Patrick Hallinan on the call. Tools & Outdoor revenue fell 13% to $3.3 billion, as price realization was more than offset by a decline in volume and a negative impact from currency. Volume was impacted by lower consumer and DIY market demand, modestly reduced channel inventory and a slow start to the retail outdoor season due to a cold March. Tools & Outdoor adjusted operating margin was 3%, down versus the prior year, as price realization was more than offset by inflation, higher supply chain costs, production curtailments and lower volume. As a strategic business unit, Power Tools and Hand Tools declined organically 12% and 6%, respectively, primarily driven by consumer demand. POS was down year-over-year in Q1, and they expect that trend to continue in Q2. Pro demand continues to be very healthy and they don’t see any major shift in that area. The consumer side has been relatively flat since the second quarter of last year. They don’t expect any strengthening on the consumer side as people continue to shift their dollars to different spending categories. A key growth area for outdoor is leveraging the 2,500 Pro dealers that they acquired with their acquisitions. This channel delivered a strong performance in the quarter and was up double digits year-over-year. Pro products under the Cub Cadet and Hussle Brands had a solid start, and they are building traction with their DeWalt cordless handheld products across the dealer network. They’ve approved the reduction of 60,000 SKUs across the portfolio, of which 16,000 are now decommissioned. The remaining 44,000 are no longer being manufactured. They are working with their customers to transition to new SKUs in the coming quarters. The SKUs already eliminated had very little revenue tied to them and little inventory in the system. There's revenue tied to the 44,000 SKUs they stopped manufacturing and there is also inventory in their system. So they’ll be going through a thoughtful process of converting those customers to other products. Their global cost reduction program delivered $230 million in pre-tax savings during the first quarter and has delivered $430 million in annualized savings since it was launched. Inventory at the end of the quarter fell to $5.7 billion, down approximately $200 million from the prior quarter due to improving supply chain conditions and planned production curtailments. Inventory reduction is ahead of plan, with an incremental $200 million achieved during the quarter. Although they strategically built some inventory for Father’s Day and promotions, overall they have reduced inventory by $1 billion since mid-2022. Their full year 2023 inventory reduction target remains $750 million to $1 billion. Inventory levels at their major customers in North America are coming down but are still high. The Home Depot is within a week or so of where they’d like it to be, Lowe’s is a little higher, but traditionally runs at a much higher level of inventory. They are planning for three different scenarios for the next three years, all driven by various levels of demand. They will be disciplined on pricing and focused on improving margins during this year and beyond. Other News: SB&D announced Chris Nelson will become COO, EVP and President of Tools & Outdoor, effective June 14, 2023. Nelson joins SB&D from Carrier Corporation, where he was most recently President of Carrier’s flagship HVAC segment. Nelson will report to President and CEO Don Allen. He’s taking over from current Acting Co-Presidents Robert Raff and John Wyatt. Raff will continue to serve as Chief Commercial Officer, Tools & Outdoor and Wyatt will become Senior Vice President, Strategy and Integration. SB&D donated Craftsman tools and storage systems to The Makers Hub, a non-profit organization that’s opening the Compton Tool Library (CTL) later this summer. The CTL will allow community members to affordably borrow tools and equipment for a variety of projects, including entrepreneurial efforts, gardening, home repairs, learning trades and DIY projects. This initiative is part of The Makers Hub's ongoing efforts to promote sustainable living practices through a circular economy and reduce waste by encouraging resource sharing. The Makers Hub will also offer workshops and training sessions to help residents learn how to repair and make things while promoting safe and effective use of the equipment. Makita Makita will lay off 213 workers in the US the end of June. A notice to employees said the company-wide reorganization and reduction in force were necessary due to Makita’s “current financial condition.” Makita reported that sales for the fiscal year, which ended March 31, decreased in North America as demand dropped and fears of a recession depressed sales. Revenue increased 6.1% year over year in North America due to the depreciation of the yen against the US dollar. Makita products are sold at the Home Depot and Ace Hardware Corp. © Robert Bosch Tool Corporation. All rights reserved, no copying or reproducing is permitted without prior written approval.
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