Stanley Black & Decker Dials Up Some Growth Investments

As they make progress on a multiyear, $2 billion cost-cutting program, Stanley Black & Decker Inc. executives are also sowing seeds for some future growth.

Speaking after they reported Connecticut-based Stanley Black & Decker’s fourth-quarter results, President and CEO Don Allan Jr. and his team outlined plans to this year invest roughly $75 million more than in 2023 in product development and marketing efforts. CFO Pat Hallinan said most of those funds will be dedicated to the company’s unit making tools and outdoor products while its industrial group, which makes fasteners and storage cabinets among other things, also will receive some growth capital.

The goal, Hallinan told analysts on a Feb. 1 conference call, is to sustain the growth prospects of the company’s DeWalt, Craftsman and Stanley brands even as their parent company pushes ahead with a wide-ranging plan to close some factories and overhaul its supply chain.

“We are really focused on the long-term growth of this business and we’re going to be working hard as a leadership team and as an organization to preserve those investments even if the macro creates a bit more headwind than we’re expecting,” Hallinan said. “We’re not going to just completely collapse ‘24 investment at the risk of longer-term brand health.”

The innovation and marketing investments are being teed up for a year in which Stanley Black & Decker executives are forecasting little, if any, organic sales growth. The year’s main priority, they said, is to keep pushing toward an end-of-2025 target to cut costs by $2 billion and further lift profit adjusted gross margins. The latter were in the low-20s at the launch of the restructuring plan about 18 months ago but came in at nearly 30% in the fourth quarter.

The goal is to pass the 35% mark, which the company regularly did in past years. Aiding in that push is the pending $760 million sale of the company’s attachment and handheld hydraulic tools business to Sweden’s Epiroc AB. That deal, announced in December, is expected to close later this quarter.

Stanley Black & Decker posted a fourth-quarter loss of $276 million versus a loss of $101 million in the last three months of 2022. The 2023 number was hurt by about $160 million in asset impairment and restructuring charges as well as a big tax bill. The company’s EBITDA, however, improved to $157 million from nearly $80 million even though sales slipped 6% to $3.74 billion.

Shares of Stanley Black & Decker (Ticker: SWK) closed Feb. 5 at $88.29, down more than 2% on the day. Over the past six months, they have lost about 10% of their value, which has trimmed the company’s market capitalization to about $13.5 billion.