Black & Decker slashed its fourth-quarter profit outlook Friday, as the housing downturn has created “worse-than-expected” conditions for the Towson-based power tool and home-improvement product manufacturer.
The company?s action caused its stock price to tumble Friday to a 52-week low.
“Any of these companies that have some exposure to the housing market are feeling the effects,” said John Kearney, an analyst who covers Black & Decker for Morningstar, a Chicago-based investment research firm. “The big question is, ?What does this do to the company in 2008?? ”
Sales of existing homes are predicted to fall 12.5 percent this year to 5.67 million, the National Association of Realtors said last week. The weak housing market has hurt demand for Black & Decker?s products.
Black & Decker had predicted modest sales growth for the quarter, but the company “now expects to report a low single-digit rate of sales decrease,” the company said in a statement.
The company expects earnings per share of about $1.03 in the quarter, significantly lower than the $1.61 predicted by analysts from Stamford, Conn.-based Thomson Financial.
On Friday, the company?s revised outlook caused its stock price to drop 8.5 percent to $73.31. The price even reached a 52-week low of $71.95 Friday morning.
Black & Decker also said it expects to recall certain DeWalt XRP cordless drills manufactured in the past 18 months and incur a pretax charge of about $25 million in the fourth quarter.
In October, Black & Decker reported net earnings decreased to $104.6 million in the third quarter from $125.1 million in the same period last year. Sales for the quarter increased 1 percent to $1.6 billion.
Black & Decker is part of The Examiner Top 10, a portfolio of some of the largest publicly traded companies in the Baltimore region.
