DOW JONES NEWSWIRES
Stanley Works Inc. (SWK) barely managed to eke out a
fourth-quarter net profit, hurt by the cost of job cuts sparked by
falling demand for its tools and hardware on declining construction
and manufacturing activity.
Chief Executive John F. Lundgren said, "We are operating from a
position of strength in the most difficult environment in memory."
The company projected 2009 shipments falling 10% to 12% from 2008,
suggesting a potential drop in earnings per share of about $2 to
$2.25, but it held off on giving a forecast amid recent economic
uncertainty.
The maker of such tool brands as Stanley, Mac Tools, Bostich and
Husky reported net income of $1.1 million, or 1 cent a share, down
from $92.3 million, or $1.11 a share, a year earlier.
The latest quarter included a work force-reduction charge of 59
cents a share related to last month's announcement of 2,000 job
cuts, or 10% of the company's work force.
Net sales fell 4.6% to $1.09 billion, with the stronger dollar
contributing 5 percentage points to the decline.
Analysts surveyed by Thomson Reuters were expecting Stanley
Works to report earnings, excluding items, of 34 cents a share on
revenue of $1.05 billion.
Gross margin fell to 36.1% from 37.3% on slumping volume and the
stronger dollar.
When it announced the job cuts in December, Stanley cited an
"exceptionally severe" contraction in its construction and
do-it-yourself and industrial businesses. Although the company has
reduced its historically heavy reliance on consumer do-it-yourself
sales, it continues to generate about a third of its revenue from
that segment, Moody's Investors Service said last week. In the
quarter, the unit accounted for 6.4% of net sales, down from 13.7%
a year earlier.
Earnings in the construction and do-it-yourself segment,
Stanley's largest business, fell 61% on a 16% sales drop.
Industrial-segment profit fell 38% on a 9.8% sales decline.
Security-business profit, however, rose 27%, as sales climbed
14%.
Like other companies, Stanley balked at providing a forecast for
future periods, citing economic uncertainty. The company "will not
be providing full year 2009 guidance until the economic conditions
and end markets stabilize sufficiently to provide reasonable
visibility," it said.
Shares closed at $30.96 on Tuesday, up 1.4%, and didn't trade
premarket.
-By Mike Barris, Dow Jones Newswires; 201-938-5658;
mike.barris@dowjones.com
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