Sales fall 16% at The Stanley Works

Manufacturer cites record gross margin rate and strong free cash flow performance
Industrial Distribution Staff -- Industrial Distribution, 10/21/2009 1:18:21 PM

Tool maker The Stanley Works reported lower sales and earnings for the third quarter of 2009 but pointed to gross margin and free cash flow improvements as key positives in a continued tough economy.

Sales in the quarter fell 16 percent to $936 million; the company posted a $60.4 million profit during the quarter compared to $163 million in profit in same period a year ago.

Sales in the company's industrial segment fell 31 percent compared to the third quarter of 2008 while sales in its construction and do-it-yourself category fell 23 percent compared to the year-ago period. Security segment sales increased 3 percent.

Gross margins improved to a record rate of 41.3 percent, the company said, due to continued execution of productivity projects, price carryover and improved mix due to relatively stable performance in the company's security segment.

In addition, the company generated free cash flow of $158 million in the third quarter, up 53 percent versus the 2008 third quarter.

"We are encouraged by the second consecutive quarter of record gross margins despite the market-driven volume headwinds we experienced through September," chairman and CEO John F. Lundgren said in a statement announcing the results. "Our ongoing success in tailoring our product and service offerings to best fit our customers' needs is producing market share gains within a majority of our businesses while positioning us to take full advantage of the mild stabilization we are experiencing in select end markets."