Economy won’t stop innovation, says Stanley exec
New York City — Kyle Dancho, Stanley Black & Decker’s president of Hand Tools and Fastening, described product successes and economic challenges during a media briefing here at the Westin Hotel in Manhattan.
Despite the economic doldrums that has decimated the ranks of construction workers — a key target for the company’s products — Dancho said Stanley is growing. Innovation drives success in hand tools, particularly, he added.
Of Stanley Black & Decker’s $8.4 billion in sales spread across three divisions — Construction & DIY, Industrial and Security — more than half is generated by CDIY, Dancho said. And innovation drives sales.
"Thirty percent of our sales should come from products introduced in the last three years," Dancho said. "That’s not a perfect rule. But it keeps innovation at the forefront."
Describing the challenging economy, Dancho pointed to numbers that show 600,000 fewer construction jobs. "That’s 2 or 3 million tape rules a year that just don’t get sold," he said.
For Stanley, the merger with Black & Decker has allowed both brands plus Bostitch, DeWalt and Porter-Cable to take steps to offset the challenge. One of those steps has been to guide DeWalt into the hand tools category.
The DeWalt hand tools line already has 90 SKUs launched. By the end of the year, the total SKU count is expected to be 130. DeWalt has 19 innovations that it calls "world’s firsts," and it has 16 new patents in the line.
The company has focused on balancing the brands, and the targets and the innovations, he said. While there is some overlap, the different brands appeal to different audiences across the home improvement and construction spectrum. For instance, the Stanley brand goes very deep in the channel, and Black & Decker goes "broad and shallow," he said. "Stanley can run the whole gamut; it’s admired by the pro and the DIYer."
For DeWalt, the product line comes with theme of "guaranteed tough job-site durability," he said.
"We try not to take just an existing Stanley product and just change the color," he said. "We did very well on that, but we know we can always do better."
Diversification is another Stanley Black & Decker response to the weak buying environment and extreme market volatility. "Don’t rely on any one spot in the world," he said. "Don’t rely on any one category."
Currently, the CDIY division has 55% of its sales in the United States. The company is moving toward a 40-60 split, with 60% of its sales outside the United States.
Sales, income fall at Trex
Composite deck maker Trex announced net sales for the second quarter of 2011 of $78.4 million, compared with net sales of $115.5 million for the 2010 second quarter. Net income for the quarter, which ended June 30, 2011, was $2.1 million, compared with $4.8 million a year ago. The Winchester, Va., company reported $13.3 million of non-cash charges during the 2010 period, which included a $9.0 million increase to its warranty reserve, a $1.9 million charge related to supply contracts and a $2.4 million charge related to its joint venture for recycling waste polyethylene in Spain. Without these one-time charges, net income for the second quarter of 2010 was $18.0 million.
In a prepared statement, chairman, president and CEO Ronald Kaplan said: "As previously announced, second-quarter sales were less than expected due to poor weather in much of the country and, to a lesser extent, the challenging macroeconomic environment. The severe winter storms that impacted many parts of the U.S. through April were followed by heavier-than-normal precipitation during most of May, delaying the start of the deck-building season and negatively affecting the sell-through of our products.”
Kaplan added that Trex is focusing on dealer conversions in an effort to take more market share, as well as expanding its product portfolio to include products such as porch flooring and Trex trim and molding.
AHMA measure of industry confidence climbs slightly
The American Hardware Manufacturers Association’s AHMA Home Improvement Industry Confidence Index’s Current Situation Index improved in September to 237.5 from 229.2 in August (October 2008 = 100), while the Future Expectations Index declined slightly to 187.9 from 193.1.
In comparing current sales levels with year-ago levels, 57% of respondents said sales were higher in September versus year-ago levels, up from 55% in August. For September, 21% reported sales were even, and 21% said sales were below year-ago levels.
“September marks the third consecutive month wherein our members have reported higher sales than the preceding month," said Timothy Farrell, president and CEO of the Schaumburg, Ill.-based AHMA. "However, it also marks the third consecutive month where they have forecast future sales to be either flat or even with current levels."
Looking forward six months, 50% of September respondents said they expect sales to be above current levels, up from 48% in August. In September, 46% of respondents said they expect sales to be even in six months and 4% expect sales to be below current levels.
Looking forward one year, 59% of respondents project sales will be higher, down from 64% who felt that way in August. Forty-one percent of September respondents project sales will be even one year from now and 0% project sales will be below current levels.