Stanley Black & Decker nearing $1 billion of goods stuck in supply chain mess, CEO says

Tool maker Stanley Black & Decker has seen a significant increase in the amount of products stuck across a clogged supply chain, CEO Jim Lowery told CNBC Thursday.

“The truth is, at the beginning of the pandemic, we had about $300 million in stock in transit,” Lowry said in an interview on Squawk on the Street. “Today we have about 800 million dollars, which is half a billion dollars [more] of inventory, most of which is related to the process of moving from Asia to developed markets, including the flotilla off the coast of Long Beach.”

Lowry’s comments provide additional insight into the problems facing global supply chains, as President Joe Biden has made easing congestion at ports on the West Coast a top priority in recent weeks, unveiling a plan to expand operations 24/7 at the ports of Long Beach, California and Los Angeles. Los Angeles. . The ports together make up about 40% of the shipping containers entering the United States.

Supply chain disruptions contributed to a slower-than-expected rate of US economic growth in the third quarter. In addition, high freight costs as companies try to overcome logistical hurdles are one of the many inflationary pressures hitting the economy at the moment.

Lowry said Stanley Black & Decker — the parent company of Craftsman, DeWalt and Irwin Industrial Tools — is experiencing “tremendous inflation” in a number of areas, such as steel.

“If you take a combination of physical inflation, labor inflation, and premium transportation costs to deal with some of the supply chain challenges, the impact will be more than $1 billion. It’s a $16 billion company, and it’s $17 billion right now in terms of [annual] Revenues. Laurie said that’s a big buck.” However, Laurie said that Stanley Black & Decker is able to “refund 100% of that price, some new and mixed products, and things like that.” “

Loree’s appearance on CNBC Thursday came shortly after the company reported better-than-expected third-quarter earnings. Revenue of $4.26 billion beat analysts’ estimates of $4.25 billion, while earnings per share of $2.77 beat expectations by about 30 cents, according to Refinitiv. Stanley Black & Decker has a market capitalization of approximately $30 billion.

Despite the third-quarter defeat, Stanley Black & Decker shares fell about 1.5% in Thursday afternoon trading. Investors may react to the company’s decision to cut its full-year earnings outlook, citing primarily the impact of inflation. Stanley Black & Decker now expects 2021 adjusted earnings per share to range between $10.90 and $11.10, down from $11.35 to $11.65.

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