Dive Brief:
- Stanley Black & Decker is repositioning its supply chain to mitigate the higher costs associated with goods imported from China following President Donald Trump’s recent tariff actions against the country, according to a Q4 earnings call Thursday.
- The tools giant is expecting a $10 million to $20 million impact on its finances in 2025, factoring in adjustments to its global supply chain if the 10% tariffs on China remain in place, CFO and EVP Pat Hallinan said during the call. The impact, however, would be 10 times higher without mitigation efforts.
- “Our approach to any tariff scenario will be to offset the impacts with a mix of supply chain and pricing actions,” Hallinan said. Looking ahead, the company is optimistic about its outlook after posting fourth quarter earnings that beat analyst expectations.
Dive Insight:
Stanley Black & Decker has looked to lower its cost of goods sourced from China for years, in part so the company has less exposure to trade issues that could arise between the two countries.
Currently, the New Britain, Connecticut-based company imports between $900 million and $1 billion worth of goods from China for U.S. tools and drinkware, Hallinan said in the call. With 10% tariffs on China, Stanley Black & Decker is bracing for additional costs of approximately $90 million to $100 million per year if the company takes no mitigation actions.
While the situation is fluid, “we expect to await greater clarity before enacting any new measures beyond the work of accelerating [U.S. cost of goods sold] out of China,” Hallinan said.
The migration was underway and accelerated during the second half of 2024, he said.
As trade issues arise, tools demand has been relatively soft with high mortgage rates affecting home sales and construction activity. Stanley Black & Decker generated sales of $3.7 billion in the fourth quarter, which was flat over the previous year. The company also posted net income of $194.9 million during the period, a major leap compared to a loss of $276 million the year prior.
Looking ahead, conditions should improve in the long term as rates decline and renovations and repairs increase, president and CEO Donald Allan Jr. said on the call. Allan is also focused on ensuring President Donald Trump negotiates better deals with major trading partners.
“We continue to engage with the President and his new administration to support them in achieving their goals in these areas, while we navigate the next several months to minimize the impact to Stanley…as we exit 2025,” Allan said.
