Stanley Black & Decker’s sales of Craftsman tools may benefit from downsizing at Sears Holdings, according to the tool maker’s finance chief.
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The New Britain, Connecticut-based company, which acquired the Craftsman brand from Sears in 2017, said Thursday it expects to achieve $1 billion in Craftsman sales by 2021, six years ahead of its previous estimate. In the third quarter, Stanley Black & Decker recorded a 3 percent gain in tools and storage revenue, partly due to the initial launch of new Craftsman products.
Craftsman sales are now expected to get an additional boost from Sears’ bankruptcy. Sears filed for Chapter 11 protection earlier this month and announced plans to close another 142 Sears and Kmart stores as part of the restructuring process.
Sears and Kmart accounted for 90 percent of all Craftsman sales prior to Stanley Black & Decker’s acquisition of the iconic tool brand. Under terms of the agreement, Sears Holdings can continue selling its own Craftsman products royalty-free for 15 years.
“As you look ahead, the most important aspect of all this is we believe the potential impacts from a smaller Sears clearly would be a positive for our ongoing Craftsman launch,” Donald Allan Jr., chief financial officer of Stanley Black & Decker, said during the company’s earnings call.
CEO James Loree said Stanley Black & Decker has “done everything that we need to do to pull those sales from Sears into Stanley Black & Decker and Lowe’s.” Allan added that the company had prepared for a potential Sears bankruptcy and remains ready to convert customers.
Stanley Black & Decker has sought to broaden distribution and expand Craftsman’s product portfolio since acquiring the brand in a $900 million deal. The company said last month it began to roll out more than 1,200 new Craftsman products, including tools, equipment and storage cabinets. The products will be available through Lowe’s, Amazon, Ace Hardware and other major retail chains.
Allan said Stanley Black & Decker has built additional manufacturing capacity to support accelerated Craftsman demand.
Stanley Black & Decker expects to initially make 30 percent of its new Craftsman lineup in the U.S. It plans to expand domestic production to 50 percent over the next few years.
|SWK||STANLEY BLACK & DECKER||90.06||-9.94||-9.94%|
|LOW||LOWE'S COMPANIES INC.||80.40||-5.65||-6.57%|
The company reported third-quarter net income of $247.8 million, a 9.7 percent decline compared to the same period a year ago. On an adjusted basis, earnings rose 6 percent to $2.08. Revenue climbed 4 percent to $3.49 billion. Wall Street analysts polled by Refinitiv expected adjusted earnings of $2.03 a share on revenue of $3.59 billion.
Separately, Stanley Black & Decker announced on Thursday a new partnership with Home Depot making it the exclusive home-improvement retailer for Stanley hand tools and storage products beginning in 2019. The deal includes both in-store and online sales.
Aside from its namesake brands, Stanley Black & Decker owns other tool makers such as Dewalt and Porter-Cable.