Stanley Black & Decker Targets 35% Margin as Tool Brands Gain Traction

Key Points

• Stanley Black & Decker is targeting 34%–35% gross margins by 2027, supported by brand-focused product development, shared components and simpler supply chains. Its development cycle times have fallen 30%.
• Organic growth reached about 4% in the third quarter, with DEWALT, STANLEY and CRAFTSMAN each growing for two consecutive quarters. The company also reported double-digit growth in its U.S. construction and industrial channel.
• The company expects low-single-digit price increases and plans to prioritize growth investment, while maintaining and moderately growing its dividend. Its board has authorized a further $1 billion share-repurchase program, to be used opportunistically.

Stanley Black & Decker NYSE: SWK is targeting a gross margin of 34% to 35% in 2027 as it focuses on brand growth, product development and simpler supply chains, President and CEO Chris Nelson said at Baird’s Global Industrial Conference.

The company reported roughly 4% organic growth in the third quarter and reached a 35% margin even after excluding tariff refunds, Nelson said. Its three core brands—DEWALT, STANLEY and CRAFTSMAN—each posted organic growth for two consecutive quarters, he added.

Nelson said the company is not anticipating major changes in its markets next year. It also expects to return to a selling, general and administrative expense run rate of about 23%, after using tariff refunds to accelerate some spending on salespeople and brand advertising from 2027 into 2026.

Product Platforms Support Margin Plans

Stanley Black & Decker has reorganized around its brands rather than individual product lines, Nelson said. Under the earlier structure, separate teams developed products such as drills and saws before determining which brand to attach to them. The company now starts with a brand’s positioning and identifies the products and investments needed to serve its target customers, he said.

The company has also sought to use common components across products, reducing supply-chain complexity and helping speed new releases. Nelson said development cycle times have fallen 30% over the past couple of years.

New products must now use the company’s platforming approach, and Stanley Black & Decker is beginning to apply common components to existing products. Nelson said the resulting material productivity is an important part of its opportunity to expand margins.

Professional Tools and DIY Opportunities

Nelson said the company has seen double-digit growth in its U.S. construction and industrial channel and believes it is growing faster than the market. Construction activity, including data center projects, has supported demand, though he said he does not view the opportunity as dependent solely on data centers.

For DEWALT, the company is investing in specialists who work with tradespeople and distributors, as well as outreach to younger professionals through trade schools and social media. Nelson said Stanley Black & Decker’s data show that customers already using a battery system are more than 80% predisposed to remain in that ecosystem when buying another tool.

CRAFTSMAN’s focus has been on developing products for do-it-yourself customers, including tools for garages, gardens and home renovations. Nelson described the DIY market as more stable than he expected, though he did not characterize it as a growth engine. He said CRAFTSMAN has an opportunity to gain share as the company sharpens the brand’s purpose.

For STANLEY, the company has been refreshing products and adding support for hand-tool wholesalers, particularly in Europe, Nelson said.

Pricing and Capital Allocation

Nelson said inflation accelerated somewhat toward the end of the year, and the company expects to take some price increases regardless of what happens with tariffs. He described the potential increases as low-single-digit levels and said the company would work with channel partners to maintain growth.

On capital allocation, Nelson said investing in growth remains the priority. Any acquisitions would be bolt-on deals that support the company’s organic strategy rather than transformational transactions, he said. The company also plans to maintain and moderately grow its dividend.

Stanley Black & Decker completed a $500 million share repurchase, and its board authorized another $1 billion program. Nelson said the company plans to use that authorization opportunistically as it weighs investment opportunities.

About Stanley Black & Decker (NYSE:SWK)

Stanley Black & Decker is a global manufacturer of tools, outdoor equipment and engineered fastening products. Its portfolio includes power and hand tools, tool storage, accessories, and outdoor power equipment sold under brands such as DEWALT, CRAFTSMAN, STANLEY and BLACK+DECKER. The company also supplies engineered fastening solutions and related products to customers in industries such as construction, automotive and manufacturing. Its products serve professional users, businesses and consumers in markets around the world.

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