Stanley Works' (SWK) second-quarter earnings fell 11% as a
debt-repurchase gain masked the tool maker's slumping sales, though
its security business remained a bright spot as it continued to
benefit from acquisitions.
The company also lowered its 2009 shipments forecast by 5
percentage points, now predicting volume will drop 18% to 20%.
Stanley Works, which unveiled a $100 million cost-cutting
initiative when it released first-quarter results in April, is
trying to combat steep volume declines in the face of stalled
manufacturing projects and consumer cutbacks.
The company - with such tools brands as Stanley, Mac Tools,
Bostich and Husky - has thus far found enough savings to announce
earlier this week it would raise its quarterly dividend by a penny
to 33 cents.
Stanley Works reported earnings of $69.5 million, or 87 centsa
share, down from $78.1 million, or 99 cents a share, a year
earlier. Results from the most recent period include a 34-cents
debt-repurchase gain.11
Revenue dropped 20% to $919.2 million with volume down 24%.
Analysts polled by Thomson Reuters forecast per-share earnings
of 54 cents on revenue of $979 million.
Gross margin rose to 39.9% from 38.3% as higher prices, lower
materials costs and increased sales in its security segment more
than offset the volume drop.
Revenue from the consumer do-it-yourself business fell 28%,
pushing profit down 45%. But sales trends have begun to show some
signs of improvement, the company said. Industrial revenue fell 40%
and profit declined 56% as volume tumbled 39%.
But revenue in the security segment rose 8%, though organic
revenue fell by the same amount. Earnings climbed 13%.
Shares closed Tuesday at $38.03 and were inactive premarket. The
stock is up 12% this year.
-By Melissa Korn and Tess Stynes, Dow Jones Newswires; melissa.korn@dowjones.com
