By Andrea K. Walker , andrea.walker@baltsun.com|October 23, 2009
Black & Decker Corp. said Thursday that it is starting to see demand for its products stabilize, but said that doesn't mean the power tool market is ready for a rebound.
"We are not seeing a recovery in demand but continue to see stabilization," said Steve Reeves, Black & Decker's chief financial officer, during a call with analysts to discuss third-quarter earnings.
Reeves said retailers that sell the Towson company's products are no longer "destocking" as in the first half of the year, but they are not buying more either. "I think they're holding steady now," he said.
FOR THE RECORD
An article in Friday's editions about Black & Decker misidentified Morningstar analyst Anthony Dayrit.
The Baltimore Sun regrets the error.
The company's earnings fell 35 percent as it continued to be hurt by a decline in residential and commercial construction.
"There's a sense that things aren't getting any worse, but things aren't going to be better right away," said Andrew Dayrit, an equity analyst who follows the company for Morningstar. "For Black & Decker to improve, you'd have to see a pretty substantial rebound in construction activity, not just on the residential side but on the commercial side, too."
The company reported a net income of $55.4 million, or 91 cents per share, for the quarter that ended Sept. 28, compared with $85.8 million, or $1.41 per share, for the same period a year ago.
Sales fell 23 percent, to $1.2 billion, including a negative 3 percent impact for foreign currency translation, with all categories getting hit. Sales of power tools and accessories dropped 21 percent, while sales in hardware and home improvement were down 17 percent.
However, Black & Decker officials said the company did better than expected because of strong promotions. It met its guidance, which it had raised earlier this month.
The company has made several cost-cutting moves throughout the year to help weather the downturn, including cutting 1,200 jobs and lowering base salaries of top executives.
It expects the fourth quarter to be much like the third, which would represent a double-digit decline from last year. Typically, the fourth quarter is stronger because of holiday shopping.
The company expects earnings of 68 cents to 78 cents per share in the fourth quarter, and in the range of $2.44 to $2.55 for the entire year. The estimates exclude a first-quarter restructuring charge.
