Cases
Stanley Black & Decker, Inc.
Corporate Governance / Derivative
Overview
Overview
- Date:
- 8/22/2023
- Company Name:
- Stanley Black & Decker, Inc.
- Stock Symbol:
- SWK
- Class Period:
- FROM 10/28/2021 TO 7/28/2022
- Status:
- Filed
- Filing Date:
- 3/24/2023
- Court:
- U.S. District Court: Connecticut
Bragar Eagel & Squire, P.C., a nationally recognized shareholder rights law firm, is investigating potential claims against Stanley Black & Decker, Inc. (NYSE: SWK) on behalf of long-term stockholders following a class action complaint that was filed against Stanley on March 24, 2023 with a Class Period from October 28, 2021 to July 28, 2022. Our investigation concerns whether the board of directors of Stanley have breached their fiduciary duties to the company.
At the outset of the Class Period, Stanley was undergoing a multi-year simplification of its business units through acquisitions and divestitures to return to the Company’s roots of primarily defining itself as a tool manufacturer. Throughout this transformation, Stanley enjoyed what it described as the strongest consumer demand environment in the Company’s history to finance the Company’s activities.
Specifically, Stanley repeatedly informed investors throughout 2021 and into 2022 that the COVID-19 pandemic environment of stay-at-home orders and remote work had led many consumers to spend more time at home, thus spurring increased home remodeling and do-ityourself (“DIY”) projects, consequently creating high consumer demand for Stanley’s tools and outdoor products.
Throughout the Class Period, Defendants misrepresented to investors and the public that despite rising inflation and interest rates, and Stanley’s multiple rounds of product price increases, that pandemic-fueled, heightened consumer demand for tools and outdoor products would be sustainable through 2022 due to continuing construction and DIY projects.
Additionally, while Defendants admitted at all relevant times that supply chain management and component sourcing was integral for Stanley to keep production in pace with demand in its core Tools and Outdoor business, Defendants misrepresented to investors throughout the Class Period that they were closely monitoring the effects of inflation and price increases on consumer demand, and that Defendants would react accordingly if the demand environment changed.
Contrary to Defendants’ statements touting the heightened consumer demand and their ability to react accordingly to any effects of inflation or price increases on said demand, Stanley was incapable of nimbly responding to serious headwinds that indicated the pandemic demand bubble was soon to pop. Furthermore, Defendants knew that their statements were false and misleading as they admittedly tracked Stanley’s point-of-sale results to monitor demand.
The truth began to be revealed on April 28, 2022 when Defendants issued a set of partial corrective disclosures stating that Stanley’s Tools and Outdoor net sales had dropped in the Company’s first fiscal quarter of 2022 to $4.4 billion, and that Stanley was accordingly revising its earnings per share guidance down for fiscal year 2022. Defendants also disclosed that Stanley’s gross margin dropped “610 basis points from prior year as price realization was more than offset primarily by commodity inflation, higher supply chain costs to serve demand and lower volumes.”
On this news, Stanley stock fell 8.6% or $12.01 per share, from a close of $139.14 per share on April 27, 2022, to a close of $127.13 on April 28, 2022.
However, Defendants continued to make false and misleading statements regarding the Company’s deteriorating demand. For example, the Company’s April 28, 2022 press release stated that “[v]olume was in line with expectations, but constrained by temporary electronic component supply challenges, which have continued to improve.” On an earnings call held for investors that morning, Stanley’s Chief Executive Officer (“CEO”) James Loree echoed the press release in stating that component supply, rather than falling demand, was the primary headwind for Stanley’s sales volume, noting “[t]he volume could have been higher, but for the supplyconstrained environment that we continue to make progress on resolving”.
Defendants repeatedly mislead investors about the Company’s core Tools and Outdoor segment, stating that the Tools and Outdoor sales decline was attributable to supply chain issues rather than falling demand. For example, Defendant Loree reassured investors that “while the boom global conditions of 2020 and 2021 have leveled off, the fundamentals and secular drivers remain healthy and are still very much intact”, that “the combination of repair/remodel, new residential construction and commercial construction have plenty of runway to continue to drive enduring demand”, and that “we will monitor and respond accordingly if and when we observe any adverse impact from a higher interest rate environment and/or significant elasticity of demand effects following our pricing actions.” Defendant Allan also reassured investors that “the headline for the first quarter is that demand for our products remains healthy” and, in response to an analyst question, that there “is not an assumption that there’s some significant slowdown related to overall demand.”
On July 28, 2022, the truth was fully revealed when Stanley released its Q2 2022 results in a press release before stock markets opened for trading. In the press release, Defendant Allan stated that “significantly slower demand in late May and June [] drove the majority of the challenges we faced this quarter” and that “[a]s the softening of the demand environment accelerated rapidly during the last portion of the quarter … [w]e are now preparing for demand to normalize closer to 2019 levels for the remainder of 2022.” Defendants also contemporaneously held an earnings call for investors and analysts the morning of July 28, 2022. Defendants revealed on the call that, due to a sharp slowdown in consumer demand for power tools in May through June 2022, sales volumes had in fact shrunk by double digits, the Company’s net income for its second quarter had plunged to $87.6M compared to $459.5M in the year-earlier quarter, and that Stanley was cutting its 2022 earnings per share guidance by nearly half.
Upon the news that demand had plummeted, that sales volumes had shrunk, and that Stanley was slashing its earnings guidance for 2022 by nearly half, Stanley’s common stock, which had closed at $117.45 per share the evening prior, fell to a closing price of $98.58 per share on July 28, 2022 on heavy trading volume, representing over a 16% day-over-day drop.
If you are a long-term stockholder of Stanley, have information, would like to learn more about these claims, or have any questions concerning this announcement or your rights or interests with respect to these matters, please contact Brandon Walker or Marion Passmore by email at investigations@bespc.com, by telephone at (212) 355-4648, or by filling out the form below. There is no cost or obligation to you.
At the outset of the Class Period, Stanley was undergoing a multi-year simplification of its business units through acquisitions and divestitures to return to the Company’s roots of primarily defining itself as a tool manufacturer. Throughout this transformation, Stanley enjoyed what it described as the strongest consumer demand environment in the Company’s history to finance the Company’s activities.
Specifically, Stanley repeatedly informed investors throughout 2021 and into 2022 that the COVID-19 pandemic environment of stay-at-home orders and remote work had led many consumers to spend more time at home, thus spurring increased home remodeling and do-ityourself (“DIY”) projects, consequently creating high consumer demand for Stanley’s tools and outdoor products.
Throughout the Class Period, Defendants misrepresented to investors and the public that despite rising inflation and interest rates, and Stanley’s multiple rounds of product price increases, that pandemic-fueled, heightened consumer demand for tools and outdoor products would be sustainable through 2022 due to continuing construction and DIY projects.
Additionally, while Defendants admitted at all relevant times that supply chain management and component sourcing was integral for Stanley to keep production in pace with demand in its core Tools and Outdoor business, Defendants misrepresented to investors throughout the Class Period that they were closely monitoring the effects of inflation and price increases on consumer demand, and that Defendants would react accordingly if the demand environment changed.
Contrary to Defendants’ statements touting the heightened consumer demand and their ability to react accordingly to any effects of inflation or price increases on said demand, Stanley was incapable of nimbly responding to serious headwinds that indicated the pandemic demand bubble was soon to pop. Furthermore, Defendants knew that their statements were false and misleading as they admittedly tracked Stanley’s point-of-sale results to monitor demand.
The truth began to be revealed on April 28, 2022 when Defendants issued a set of partial corrective disclosures stating that Stanley’s Tools and Outdoor net sales had dropped in the Company’s first fiscal quarter of 2022 to $4.4 billion, and that Stanley was accordingly revising its earnings per share guidance down for fiscal year 2022. Defendants also disclosed that Stanley’s gross margin dropped “610 basis points from prior year as price realization was more than offset primarily by commodity inflation, higher supply chain costs to serve demand and lower volumes.”
On this news, Stanley stock fell 8.6% or $12.01 per share, from a close of $139.14 per share on April 27, 2022, to a close of $127.13 on April 28, 2022.
However, Defendants continued to make false and misleading statements regarding the Company’s deteriorating demand. For example, the Company’s April 28, 2022 press release stated that “[v]olume was in line with expectations, but constrained by temporary electronic component supply challenges, which have continued to improve.” On an earnings call held for investors that morning, Stanley’s Chief Executive Officer (“CEO”) James Loree echoed the press release in stating that component supply, rather than falling demand, was the primary headwind for Stanley’s sales volume, noting “[t]he volume could have been higher, but for the supplyconstrained environment that we continue to make progress on resolving”.
Defendants repeatedly mislead investors about the Company’s core Tools and Outdoor segment, stating that the Tools and Outdoor sales decline was attributable to supply chain issues rather than falling demand. For example, Defendant Loree reassured investors that “while the boom global conditions of 2020 and 2021 have leveled off, the fundamentals and secular drivers remain healthy and are still very much intact”, that “the combination of repair/remodel, new residential construction and commercial construction have plenty of runway to continue to drive enduring demand”, and that “we will monitor and respond accordingly if and when we observe any adverse impact from a higher interest rate environment and/or significant elasticity of demand effects following our pricing actions.” Defendant Allan also reassured investors that “the headline for the first quarter is that demand for our products remains healthy” and, in response to an analyst question, that there “is not an assumption that there’s some significant slowdown related to overall demand.”
On July 28, 2022, the truth was fully revealed when Stanley released its Q2 2022 results in a press release before stock markets opened for trading. In the press release, Defendant Allan stated that “significantly slower demand in late May and June [] drove the majority of the challenges we faced this quarter” and that “[a]s the softening of the demand environment accelerated rapidly during the last portion of the quarter … [w]e are now preparing for demand to normalize closer to 2019 levels for the remainder of 2022.” Defendants also contemporaneously held an earnings call for investors and analysts the morning of July 28, 2022. Defendants revealed on the call that, due to a sharp slowdown in consumer demand for power tools in May through June 2022, sales volumes had in fact shrunk by double digits, the Company’s net income for its second quarter had plunged to $87.6M compared to $459.5M in the year-earlier quarter, and that Stanley was cutting its 2022 earnings per share guidance by nearly half.
Upon the news that demand had plummeted, that sales volumes had shrunk, and that Stanley was slashing its earnings guidance for 2022 by nearly half, Stanley’s common stock, which had closed at $117.45 per share the evening prior, fell to a closing price of $98.58 per share on July 28, 2022 on heavy trading volume, representing over a 16% day-over-day drop.
If you are a long-term stockholder of Stanley, have information, would like to learn more about these claims, or have any questions concerning this announcement or your rights or interests with respect to these matters, please contact Brandon Walker or Marion Passmore by email at investigations@bespc.com, by telephone at (212) 355-4648, or by filling out the form below. There is no cost or obligation to you.
The individual or institution below (“Plaintiff”) has reviewed and agrees to the Bragar Eagel & Squire, P.C. (“BESPC”) retainer agreement and authorizes BESPC to prosecute an action on Plaintiff’s behalf under the federal securities laws or applicable state laws to recover damages on behalf of investors in Stanley Black & Decker. BESPC will prosecute the action on a full contingency basis and will forward all costs and expenses.
Case Updates
Retainer Agreement
This will confirm that you have retained Bragar Eagel & Squire, P.C. (“BESPC”) to represent you in connection with potential litigation against Stanley Black & Decker (the “Company”) and its directors and officers. BESPC has conducted an investigation and believes that there is a valid basis to assert claims against the Company and its directors and/or officers for breach of fiduciary duties and other applicable laws.
In making this agreement, BESPC is relying upon your representation that you held the Company’s shares during the period from 10/28/2021 to 7/28/2022 (the “Relevant Period”) and that you continue to hold Company shares. Please provide us with documentation of your trading history in the Company’s stock by emailing a relevant copies of your brokerage statements to investigations@bespc.com. If you have any questions or need assistance, please call us at (212) 308-5858.
The terms under which we will represent you and your responsibilities as a potential representative plaintiff are set forth below.
You will have an obligation to remain knowledgeable about the litigation and participate in decisions concerning the progress of the litigation. If BESPC is appointed as lead counsel or in a similar capacity in the action, we will provide you with copies of all pleadings in the litigation for your review and approval, circumstances permitting, before they are filed with the court. BESPC will also promptly advise you of any significant developments in the litigation.
As a representative plaintiff, you cannot have any interest antagonistic to or in conflict with other shareholders or the Company concerning the claims we are pursuing or any relationships with any of the named defendants that would in any way impair your ability or incentive to obtain the best possible result. You agree that neither you nor any of your affiliates or agents will trade stocks while in the possession of any material non-public information you may receive in connection with the litigation. In addition, as a representative plaintiff, you may be required to continue holding Company shares. Please contact us before buying or selling Company shares.
BESPC will prosecute this litigation on a contingency basis. You will not be responsible for paying any legal fees, costs, or out-of-pocket expenses arising out of or related to the prosecution of this litigation, regardless of the outcome of the matter. If there is a monetary recovery in this action, BESPC will, at the conclusion of the litigation or any segment thereof, apply to the court for approval of an award of attorneys’ fees and reimbursement of expenses. BESPC may also seek a fee if we obtain substantial non-monetary relief for the Class or the Company. The court will then award fees and disbursements (if any) from the proceeds of any judgment or settlement obtained in this litigation, based on factors considered relevant by the court. Such fees, costs, and disbursements will be paid from the entire settlement amount and not only from your share of the settlement amount.
BESPC may associate with other counsel to assist in the prosecution of this litigation. Any recovery of fees and costs will be shared with such counsel, determined on a percentage basis or based upon the time spent on the matter, as approved by the court if applicable. The division of work and or fees among co-counsel will not affect the amount of fees received upon a successful completion of the litigation. From time to time, BESPC may utilize contract attorneys to supplement the work of its own employed attorneys. BESPC will supervise the work of all contract attorneys and adopt their work product as its own. You authorize BESPC, as we deem appropriate, to associate with other counsel and to hire experts and consultants to assist in the handling of your claims.
It is possible that you will not be appointed as a lead plaintiff in the action. However, we may wish to represent you in other litigation related to the wrongful acts giving rise to this case. In such event, we will contact you to discuss the scope of such representation and obtain your approval before moving forward. You also agree that we may contact you with respect to other potential matters on your behalf.
BESPC will consult with you regarding any settlement negotiations and seek to obtain your approval for any proposed resolution of this litigation before entering into a final settlement agreement with defendants.
You expressly acknowledge that we have not made any representation to you, express or implied, concerning the outcome of any litigation or other matter in which we represent you.
If you are not chosen as a representative plaintiff and we do not choose to pursue other related litigation on your behalf, we will provide you with notification and this Agreement shall terminate. Otherwise, this Agreement shall remain in effect until the conclusion of the relevant litigation. However, you may terminate this Agreement at any time.
Upon termination, BESPC’s files and papers compiled in connection with its investigation and prosecution of this matter constitute the work product and property of BESPC over which it has complete control with respect to its use and/or disclosure.
This agreement sets forth the entire agreement between the parties and supersedes all other oral or written communications.
Please feel free to contact us at any time should you have any questions or comments in this regard.
In making this agreement, BESPC is relying upon your representation that you held the Company’s shares during the period from 10/28/2021 to 7/28/2022 (the “Relevant Period”) and that you continue to hold Company shares. Please provide us with documentation of your trading history in the Company’s stock by emailing a relevant copies of your brokerage statements to investigations@bespc.com. If you have any questions or need assistance, please call us at (212) 308-5858.
The terms under which we will represent you and your responsibilities as a potential representative plaintiff are set forth below.
Your Responsibilities as a Representative Plaintiff
As a representative plaintiff, you will have a duty to represent the interests of similarly situated shareholders and to participate in the prosecution of this litigation. You may also be asked to provide documents concerning your trading in Company stock and may be asked to sit for a deposition. Accordingly, you should preserve all documents that relate to this case until it has concluded or we inform you otherwise. Relevant documents include any information you have about the Company or your trading in Company stock, no matter how it is recorded or who is keeping it for you. If you have any questions about whether information should be retained, please contact us.You will have an obligation to remain knowledgeable about the litigation and participate in decisions concerning the progress of the litigation. If BESPC is appointed as lead counsel or in a similar capacity in the action, we will provide you with copies of all pleadings in the litigation for your review and approval, circumstances permitting, before they are filed with the court. BESPC will also promptly advise you of any significant developments in the litigation.
As a representative plaintiff, you cannot have any interest antagonistic to or in conflict with other shareholders or the Company concerning the claims we are pursuing or any relationships with any of the named defendants that would in any way impair your ability or incentive to obtain the best possible result. You agree that neither you nor any of your affiliates or agents will trade stocks while in the possession of any material non-public information you may receive in connection with the litigation. In addition, as a representative plaintiff, you may be required to continue holding Company shares. Please contact us before buying or selling Company shares.
Contingency Fee and Advancement of Expenses
BESPC will prosecute this litigation on a contingency basis. You will not be responsible for paying any legal fees, costs, or out-of-pocket expenses arising out of or related to the prosecution of this litigation, regardless of the outcome of the matter. If there is a monetary recovery in this action, BESPC will, at the conclusion of the litigation or any segment thereof, apply to the court for approval of an award of attorneys’ fees and reimbursement of expenses. BESPC may also seek a fee if we obtain substantial non-monetary relief for the Class or the Company. The court will then award fees and disbursements (if any) from the proceeds of any judgment or settlement obtained in this litigation, based on factors considered relevant by the court. Such fees, costs, and disbursements will be paid from the entire settlement amount and not only from your share of the settlement amount.
Association with Counsel
BESPC may associate with other counsel to assist in the prosecution of this litigation. Any recovery of fees and costs will be shared with such counsel, determined on a percentage basis or based upon the time spent on the matter, as approved by the court if applicable. The division of work and or fees among co-counsel will not affect the amount of fees received upon a successful completion of the litigation. From time to time, BESPC may utilize contract attorneys to supplement the work of its own employed attorneys. BESPC will supervise the work of all contract attorneys and adopt their work product as its own. You authorize BESPC, as we deem appropriate, to associate with other counsel and to hire experts and consultants to assist in the handling of your claims.
Other Actions
It is possible that you will not be appointed as a lead plaintiff in the action. However, we may wish to represent you in other litigation related to the wrongful acts giving rise to this case. In such event, we will contact you to discuss the scope of such representation and obtain your approval before moving forward. You also agree that we may contact you with respect to other potential matters on your behalf.No Special Treatment
You understand that in the event we secure a recovery, you will not receive any special treatment or receive a greater share of any recovery based on your service as a named plaintiff. However, we may ask the Court to approve an additional award to you to compensate you for the time and effort you expend on this matter. Any such award is solely within the discretion of the Court.
Settlement
BESPC will consult with you regarding any settlement negotiations and seek to obtain your approval for any proposed resolution of this litigation before entering into a final settlement agreement with defendants.
No Guarantee of Success
You expressly acknowledge that we have not made any representation to you, express or implied, concerning the outcome of any litigation or other matter in which we represent you.
Termination of This Agreement
If you are not chosen as a representative plaintiff and we do not choose to pursue other related litigation on your behalf, we will provide you with notification and this Agreement shall terminate. Otherwise, this Agreement shall remain in effect until the conclusion of the relevant litigation. However, you may terminate this Agreement at any time. Upon termination, BESPC’s files and papers compiled in connection with its investigation and prosecution of this matter constitute the work product and property of BESPC over which it has complete control with respect to its use and/or disclosure.
This agreement sets forth the entire agreement between the parties and supersedes all other oral or written communications.
Please feel free to contact us at any time should you have any questions or comments in this regard.