Toolmaker has new drill for holidays

Black & Decker plans packaging change to help boost sales

November 04, 2001|By Kristine Henry | Kristine Henry,SUN STAFF

A thin sheet of plastic on a box might not seem like that big a deal, but at Black & Decker Corp., it's huge, write-home-about news.

With a tanking stock price, and a poor showing during the last holiday season and its most recent quarter, the Towson-based company hopes the coming gift-giving season will give it a respectable 2001.

The toolmaker has a dozen new products this holiday season, more than ever before, and it made a packaging change it hopes will also generate more gift-giving sales: Several of its products, including DustBusters, Scum-Busters and Firestorm drills, now come in boxes with see-through plastic windows, making it easier to grab shoppers' attention.

"It gives us a greater lift because you can actually see the product, and we don't have the luxury of always having them out on the shelf," said James Raskin, Black & Decker's vice president for business strategy. "Packaging is a very big weapon for us."

The old brown DustBusters of the 1980s are long gone, replaced by more powerful, curvy white models with accents in lemon, lime, orange and lavender. And because many people attach the cleaners to their kitchen or dormitory walls and want them to look good, Black & Decker is betting that the more stylish products and their see-through boxes will attract buyers.

"There's no SnakeLight this year," said analyst Joseph Sroka of Merrill Lynch Global Securities, referring to the extraordinarily successful bendable flashlight that Black & Decker introduced in November 1994. "The bigger thing for the Christmas season is not so much the new products as the way they are being merchandized."

Black & Decker is creating "orange crush" aisles in stores - shelf after shelf of its products in orange boxes, not the mishmash of box colors it had in years past. Home Depot and Lowe's are also featuring the products in special tool areas in their stores.

When Black & Decker begins saturating the airwaves with its commercials in the weeks ahead, viewers will see other weapons in the company's arsenal, such as an expanded ScumBuster that cleans carpets, a three-position screwdriver and a new cordless Firestorm drill with a red light that indicates a level angle.

They'll also see a new power saw, called the Navigator, chomping through tree branches at the hand of an unseen do-it-yourselfer. The ad then reveals the saw wielder: an elderly woman who playfully shakes her backside in satisfaction of a job well done.

The company has purchased more than 6,000 commercial slots for the holiday season. Because of the slowing economy, it was able to get the same number of ads this year as last at about 80 percent of the cost.

That leaves it with another 20 percent in the ad kitty to purchase more commercials later in the season.

"We're getting the same number of eyes for 80 percent of the money," Raskin said.

The company won't disclose how much it's spending on the ads, but according to filings with the Securities and Exchange Commission, it spent $238 million last year on advertising and promotion, and $224 million in 1999.

Still, with an economy that was shaky even before the Sept. 11 attacks on the World Trade Center and the Pentagon, analysts said it's unclear if consumers will buy as many products as they have in past years.

"Obviously, it's going to depend a great deal on what people's confidence levels are at that point in time. They will probably be lower than they otherwise would have been, given the events of Sept. 11," said Lawrence Horan, director of research at Parker/Hunter Inc. in Pittsburgh. "How much lower, at this point, is anybody's guess."

Even if consumers are a bit skittish this year about spending too much for the holidays, Black & Decker could make out all right, said Kurt Barnard, president of Barnard's Retail Trend Report, an industry newsletter.

"Things for the home are going to be the best sellers this holiday season," he said. "This will be a somewhat restrained holiday shopping season, but the products moving the best will be those made to make life at home easier, better and more pleasant."

Black & Decker is coming into this holiday season with the unhappy burden of a disappointing third quarter, in which its profit dropped nearly 50 percent to $46.4 million and sales were down 6 percent to $1.06 billion.

It is also shadowed by its poor showing in last year's critical fourth quarter, in which sales fell 6 percent to $1.3 billion and profit was down 54 percent to $52.5 million - including a one-time restructuring charge of $39 million.

Its shares have fallen from a 52-week high of more than $46 to $33.66 on Friday.

The fourth quarter is a crucial time for the toolmaker. In 1999, the last quarter accounted for 36 percent of the profit for the year and 29 percent of sales. Last year, as the economy began to soften, the fourth quarter produced just 27.5 percent of the profit and 28 percent of sales.

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