Stanley Black & Decker Pricing Spineometer: 5 of 5 Vertebrae


Tim J. Smith, PhD
Founder and CEO, Wiglaf Pricing

Published January 16, 2024

Stanley Black & Decker, a tools and hardware company, had a mixed Q3 2023. Revenue fell 4% to $3.95 billion but earnings before interest and taxes rose 47% to $323 million over the same period last year.

A review of Stanley Black & Decker’s 27 October earnings call and financial report provided insight regarding the importance of pricing on performance.

Don Allen, CEO of Stanley Black & Decker, reiterated his strategy to focus on product innovation, cost efficiency, and share gains.

In keeping with this strategy, Pat Hallinan, CFO of Stanley Black & Decker, remarked, “As it relates to complexity reduction, our teams are assisting customers as they transition to replacement products with the goal of exiting 30,000 SKUs by the end of 2023.”

Currently, Stanley Black & Decker is managing post-pandemic inventory and channel challenges.  During the pandemic, the supply of circuits and chips was hampered by a global shortage, impacting Stanley Black & Decker’s power tool production.  Also, demand and channel inventories increased for the DIY (Do It Yourself) Tools and Outdoor segment during the pandemic. In 2023, the distribution channel began to reduce its inventories to more normal stocking levels and adjust to the decline in DIY consumption.

Price itself was only briefly mentioned.  Don Allen attributed a 110 bp increase in margins in the Industrial segment to price realization and favorable currency.  Chris Nelson, COO of Stanley Black & Decker, mentioned price was down 2% in the Tools and Outdoor segment related to cordless promotions.

Reducing the product line is a major decision and could reflect a broader post-pandemic trend.  An alternative strategy would have been to raise prices on these 30,000 SKUs.  The fact that they are exiting these offerings rather than raising prices on them hints at a change in customer demands post-pandemic:  customers are accepting fewer choices and purchasing good enough items for a lower price rather than demanding their chosen specialty item at a higher price.  Similar movements can be seen with Coca-Cola and other consumer goods producers.

From industry benchmarks, we would expect Stanley Black & Decker to have 35 to 160 professionals dedicated to pricing.

  1. Stanley Black & Decker serves customers globally, including major operations in North America, Europe, Australia, Japan, and emerging markets. As such, the pricing professionals would be collocated globally.
  2. Given the focus on product innovation, Stanley Black & Decker should have a team focused on pricing new products as well as competitive intelligence.
  3. Given a reliance on promotions, Stanley Black & Decker’s pricing team would also have a portion focused on promotional design and calendar management.
  4. Stanley Black & Decker sells through the channel. Channel or commercial policy would be another important part of the pricing team’s remit.
  5. And there are the standard issues of negotiation management.

Research into the investment by Stanley Black & Decker in pricing yielded very encouraging results.  The pricing team identified was well within the expectation range.  Pricing professionals were globally dispersed including roles across North America, Poland, Brazil, and elsewhere.  Titles varied from specialist and analyst to lead, manager, and director.  Several held responsibilities for new product development pricing and value quantification, others in analytics and revenue growth management.   One individual was identified as the Vice President of Margin Excellence.

Given the importance and capability of pricing at Stanley Black & Decker as indicated in financial reports, management statements, and our pricing team research, and given their performance, we have come to the following conclusion as of January 2024.

Stanley Black & Decker Pricing Spineometer: 5 out of 5 Vertebrae.

SWK (Stanley Black & Decker, Inc.) rose from 77 the day prior to their earnings call to 86 one week later. FY 2022 revenue of $16.9 billion with a 5.5% operating margin and negative P/E ratio.

For FY 2022, a 1% improvement in price would yield an 18.3% improvement in operating profits holding all else constant at Stanley Black & Decker.

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About The Author

Tim J. Smith, PhD, is the founder and CEO of Wiglaf Pricing, an Adjunct Professor of Marketing and Economics at DePaul University, and the author of Pricing Done Right (Wiley 2016) and Pricing Strategy (Cengage 2012). At Wiglaf Pricing, Tim leads client engagements. Smith’s popular business book, Pricing Done Right: The Pricing Framework Proven Successful by the World’s Most Profitable Companies, was noted by Dennis Stone, CEO of Overhead Door Corp, as "Essential reading… While many books cover the concepts of pricing, Pricing Done Right goes the additional step of applying the concepts in the real world." Tim’s textbook, Pricing Strategy: Setting Price Levels, Managing Price Discounts, & Establishing Price Structures, has been described by independent reviewers as “the most comprehensive pricing strategy book” on the market. As well as serving as the Academic Advisor to the Professional Pricing Society’s Certified Pricing Professional program, Tim is a member of the American Marketing Association and American Physical Society. He holds a BS in Physics and Chemistry from Southern Methodist University, a BA in Mathematics from Southern Methodist University, a PhD in Physical Chemistry from the University of Chicago, and an MBA with high honors in Strategy and Marketing from the University of Chicago GSB.