First-quarter tools: B&D and Stanley report
In a financial coincidence, Stanley Works and Black & Decker—two of the storied names in American hardware—both posted first-quarter earnings of about $68 million. However, that’s where the similarities ended—with Stanley describing slight increases over last year, and Black & Decker pointing to declines in sales and earnings.
“Black & Decker’s results this quarter reflect an increasingly difficult business environment. Demand for tools and home improvement products decreased sharply in North America, and commodity costs continued to rise,” said Nolan Archibald, chairman and CEO.
Towson, Md.-based Black & Decker reported net sales of $1.49 billion for the quarter, down 5.1 percent from $1.57 billion as reported last year. Net earnings declined 37.6 percent to $67.4 million, down from $198.1 million in the same quarter last year.
The company also reported it would be cutting approximately 700 jobs.
Archibald said that sales in power tools and accessories segment decreased 10 percent for the quarter, which he attributed to the down turn in residential construction.
Sales in the hardware and home improvement segment decreased 14 percent, according to Archibald.
“Today’s business climate, including the housing down turn and related credit tightening, poses one of the toughest challenges Black & Decker has faced in many years. We remain confident that our efforts to improve the company’s geographic balance and cost structure will enable us to manage through this period effectively,” said Archibald.
He added that the company would be reducing expense levels especially in their power tool section.
New Britain, Conn.–based tool manufacturer Stanley Works reported first-quarter net earnings of $68.0 million, up 0.6 percent from $67.6 million last year. Net sales were $1.09 billion, up 3.3 percent from $1.06 billion from last year.
John Lundgren, chairman and CEO of Stanley Works, noted that the company’s consumer DIY sales were flat, but the company’s industrial segment saw growth.
“Despite continued contraction of several key U.S. markets, we were able to deliver earnings improvement and solid cash flow results due to strength in security, industrial Europe and engineered solutions,” said Lundgren.
Lundgren also mentioned the effect the anti-dumping tariffs imposed on imported fasteners from China and the United Arab Emirates would have on Stanely’s Bostitch fastener brand.
“In the short term, it’s neutral, neither positive nor negative,” he said. “In the long term, we think it’s an advantage for Bostitch.” Lundgren mentioned that while the tariffs ranged from 4 percent to 114 percent, Bostitch only incurred a mild tariff of 19 percent, well below much of the competition. Lundgren also pointed out the fact that Bostitch has production facilities in North America and Poland as well as Beijing, and production can be transferred across the three continents as needed.
Home Depot to close 15 stores
Home Depot will close 15 underperforming stores, the company has announced, and remove 50 future openings from the new store pipeline. The closings will include layoffs of about 1,300 employees.
The closings, at locations in the Midwest and Northeast, will generate approximately $547 million in pre-tax charges in the company’s first quarter. The company will release first-quarter results on May 20.
The stores to be closed are as follows:
• Store no. 2015 in East Fort Wayne, Ind.
• Store no. 2032 in Marion, Ind.
• Store no. 2310 in Frankfort, Ky.
• Store no. 379 Opelousas, La.
• Store no. 2819 Cottage Grove, Minn.
• Store no. 6901 East Brunswick, N.J.
• Store no. 6904 Saddle Brook, N.J.
• Store no. 6171 Rome, N.Y.
• Store no. 3702 Bismarck, N.D.
• Store no. 3874 Findlay, Ohio
• Store no. 3865 Lima, Ohio
• Store no. 4552 Brattleboro, Vt.
• Store no. 4932 Beaver Dam, Wis.
• Store no. 4933 Fond du Lac, Wis.
• Store no. 4913 Milwaukee, Wis.
Home Depot said in a statement it still intends to build 55 new stores this fiscal year, including 36 new stores in the United States.
As for other stores in the works, the company said it has “determined that it will no longer pursue the opening of approximately 50 U.S. stores that have been in its new store pipeline, in some cases for more than 10 years. Accordingly, the company will record a charge of approximately $400 million related to capitalized development costs and ongoing obligations associated with those future store locations.”
“This is a continuation of our disciplined approach to capital allocation that we outlined last year,” said Frank Blake, Home Depot chairman and CEO, in a statement. “We will invest in our core retail business, in this case our existing stores, which drive our most profitable sales. Our capital efficiency model will also provide improved returns for our shareholders through dividends and share repurchase.”
Home Depot added that investments in existing retail stores will continue to include “maintenance, merchandising resets and other initiatives to improve all elements of the customer’s shopping experience.”
The company reiterated that its total capital spending for the current fiscal year is projected to be approximately $2.3 billion, down from $3.6 billion last year.
Sherwin-Williams earnings fall in the first quarter
Sherwin-Williams saw earnings fall in the first quarter of 2008, but the worldwide paint and coatings giant is still seeing strength in international sales.
Earnings fell 30.3 percent in the first quarter to $77.9 million from $111.8 million in the same period last year. Net sales grew just over 1 percent to $1.78 billion from $1.76 billion in the same period last year.
The stronger net sales were in large part due to strong Global Group sales, as was the case last quarter. Favorable currency rates and eight acquisitions since last year’s first quarter helped aid international sales, according to the paint company.
In the company’s retail Paint Stores Group, net sales were $1.031 billion in the quarter, 1.9 percent lower than in last year’s first quarter. Sales were weak due to “soft architectural paint sales and weak sales in non-paint categories partially offset by improved industrial maintenance product sales.”
Same-store sales decreased 6.5 percent compared with last year, and earnings decreased 31.9 percent. Earnings were weaker because of increased product and freight costs, the company noted.
The company’s Consumer Group, which includes paint products like Dutch Boy, saw sales decrease 4.8 percent in the quarter to $286.9 million. The sales decline was due primarily “to soft DIY demand at most of the segment’s retail customers.” Earnings in the Consumer Group were down 23.7 percent due to higher raw material costs, as well as a lower volume of movement at the company’s distribution centers.
The Global Group’s net sales increased 14.8 percent to $461.9 million due to market share gains, selling price increases, favorable currency translation and acquisitions. Earnings for the Global Group increased 21.7 percent to $7.7 million.
“Paint demand in the domestic new residential, residential repaint, DIY and commercial markets was weaker during the first quarter than we had anticipated at the start of the year,” said Christopher Connor, chairman and CEO of Sherwin-Williams. “We continue to be pleased with the strong sales improvements of the foreign business units in our Global Group and the continued growth they have been achieving in the architectural, industrial maintenance, OEM and automotive finishes product lines.”
Connor also noted that the Paint Stores Group opened 17 new stores in the first quarter and closed 23 “redundant stores.”