Stanley Black & Decker's Q2 2025 Earnings Call: Unpacking Contradictions in Tariff Mitigation and Gross Margins

Tariff mitigation and gross margin impact, tariff mitigation and pricing strategy, gross margin expansion and tariff impact, tariff mitigation and pricing actions, tariff costs and USMCA compliance are the key contradictions discussed in Stanley Black & Decker's latest 2025Q2 earnings call.



Executive Leadership Transition:
- Donald Allan announced his retirement as CEO, effective October 1, with Christopher John Nelson assuming the role.
- This transition is part of a broader strategic planning process, with Allan moving to the Executive Chair position to support the company's future growth.

Financial Performance and Tariff Impact:
- Stanley Black & Decker reported revenue of $3.9 billion, down 2% year-on-year, with a 3% organic decline in Q2 2025.
- The decline was attributed to a slow outdoor buying season and nontypical shipment disruptions due to tariffs, which had a 3-point gross margin impact.

Gross Margin and Tariff Mitigation:
- Adjusted gross margin rate was 27.5% in Q2 2025, down from the previous year due to tariffs.
- The company is implementing a disciplined approach to mitigate tariffs through supply chain adjustments and judicious pricing actions, with an estimated annualized gross tariff cost of $800 million.

Tools & Outdoor and Engineered Fastening Segments:
- Tools & Outdoor revenue decreased by 3% organically, with a 5% decline in volume due to tariff-related disruptions.
- Engineered Fastening reported a 1% organic decline, with automotive experiencing a mid-single-digit decline due to reduced production schedules and capital expenditures by OEMs.

Cost Control and Supply Chain Transformation:
- Stanley Black & Decker achieved approximately $150 million in pretax run rate cost savings in Q2 2025, with a total of $1.8 billion since the program's inception.
- The supply chain transformation is expected to deliver approximately $2 billion in pretax run rate cost savings, supporting profitable organic growth and improved customer-focused innovation.