Revitalizing and Renewing Company Growth
Black and Decker was an old-line manufacturing company in the 1980s that faced slow growth and low single-digit profitability.
ISSUE
The well-known brand was losing market share to Japanese and German power tool companies and its product line was dated and not competitive with professional user requirements. The acquisition of the GE small appliance business was ill-advised and diluted profitability further.
SOLUTION
Implemented a “cut and build” strategy: initially reducing overhead by nearly 30% and restructuring the company to focus on renewed product development and quality. Product management and marketing was restructured to focus separately on the consumer and professional markets. The major driver of the turnaround was the development of DEWALT, a revitalized and renewed brand focusing on the professional power tool user. New engineering and marketing leaders were hired and the DEWALT division was formed. The target was to meet and beat the Japanese power tool companies in the professional market.
RESULTS
The DEWALT brand grew from less than $50M in sales to over $500M in less than 5 years. Big box stores such as Home Depot and Lowe’s were integral to the strategy and became B&D’s largest customers. The company’s power tool business grew more than 10% per year in the next five years and profitability improved to 12% of sales. The Black and Decker stock price increased from less than $10/share to over $50/share.