Stanley Works tops targets, announces more cost cutting
By Shawn Langlois, MarketWatch
Last Update: 4/24/2009 12:13:00 PM
SAN FRANCISCO (MarketWatch) - Stanley Works shares jumped more than 11% on Friday
after the toolmaker posted a drop in first-quarter profit that wasn't as bad as
Wall Street had expected and also announced more cost-cutting measures.
Stanley (SWK) stock was up $3.83 at $37.45 in midday trades and has now added 10%
since the beginning of the year.
The New Britain, Conn.-based company reported earnings of $37.7 million, or 47
cents a share, down from $66.5 million, or 83 cents a share, in the year-earlier
period
Sales fell to $913 million from $1.07 billion.
A survey of analysts by FactSet Research produced consensus estimates, on
average, of 36 cents of profit on $970.9 million of revenue.
Gross-profit margin widened 1.7 percentage points to 39.6%.
Stanley Works announced plans to save another $100 million in cost cuts annually,
with $45 million in savings realized this year. The company plans to reinvest a
third of the 2009 savings to develop its brands and fund growth in its security
business.
The cuts are expected to save 28 cents a share in 2009.
Stanley said it sees the benefit in 2009 from the company's 2008 cost-cut program
at $1.75 a share. Overall, the company is looking to earn $2 to $2.50 a share in
2009. Wall Street previously targeted a profit of $2.35 a share.
"Negative volume trends and the headwinds of unfavorable currency movements will
impact our earnings potential this year, however, we have aligned the company's
cost structure with the current economic environment and have positioned Stanley
for growth as conditions improve," CFO Donald Allan said
