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Tool maker
Stanley Black & Decker Inc.
on Wednesday said Chief Financial Officer
Donald Allan Jr.
will become chief executive officer, a relatively rare move for a finance chief.
Mr. Allan will succeed
James Loree,
who joined the company in 1999 as CFO and rose through the ranks to ultimately become president and CEO in 2016. Mr. Loree will leave Stanley Black & Decker on July 1, according to the company.
Mr. Allan joined Stanley Black & Decker in 1999 and has served in a number of roles since then, including controller and director of financial planning.
In February of last year, Mr. Allan took on the role of president in addition to his CFO role, assuming responsibility for the company’s operations and growth initiatives such as Stanley X, the company’s innovation unit. He will join the company’s board in connection with his latest promotion.
Donald Allan Jr., president and chief financial officer of Stanley Black & Decker, will become chief executive on July 1.
Photo:
Stanley Black & Decker
Looking ahead, the company said it would focus on growing its core tools and outdoor businesses. Stanley Black & Decker reported net sales of $4.4 billion for the quarter ended April 2, up 20% from the prior year period. Net earnings attributable to the company were $175.3 million during the quarter, down from $487.4 million a year earlier.
In a note to clients, analysts at Barclays said they expect Mr. Allan to focus on growth, including raising free cash flow and integrating MTD Products Inc., which Stanley Black & Decker acquired fully last year after taking a stake earlier. The company reported negative free cash flow of $1.38 billion in its latest quarter, compared with minus $246.1 million a year earlier, which it attributed largely to spending on inventory.
Mr. Allan will also need to get a handle on the company’s supply-chain problems and rebuild credibility among investors, particularly in areas such as margins and strategy execution, said
Timothy Wojs,
a senior research analyst at investment bank Robert W. Baird & Co.
“They have had several quarters where the supply chain whac-a-mole has come up,” ranging from issues around availability of supplies to commodities and logistics, Mr. Wojs said. Adding the designation of president to Mr. Allan’s title last year “set him on the path” to become CEO, Mr. Wojs said.
Stanley Black & Decker’s share price has underperformed the S&P 500 in recent months, putting pressure on the company’s current CEO. Its stock closed at $114.70 on Wednesday, down over 39% since the beginning of the year and about 3.36% lower from Tuesday’s close. The S&P 500 is off about 14% since the beginning of the year.
The leadership change is “not a shock” in light of the underperforming stock price, the analysts at Barclays said. Choosing a CFO to succeed the chief executive is “somewhat unusual” in its sector, they said, though Mr. Allan’s responsibilities were broader than those of a typical CFO.
Ascension to the chief executive role is uncommon for top finance officers. Last year, just under 8% of CEOs at companies in the S&P 500 and Fortune 500 came from the CFO seat, according to executive search firm Crist Kolder Associates. That was up from 6.6% in 2020, the firm said.
Making it to the top post can be easier for those finance executives with experience running a business, said
Justin Gault,
managing director in the financial officers practice at recruiting firm Sheffield Haworth.
“I think for the right individual, the CEO seat is the natural path for the CFO,” he said. “But few CFOs will make it to be CEO.”
Corbin Walburger,
vice president of corporate business development at Stanley Black & Decker, will serve as interim CFO, the company said.
Write to Jennifer Williams-Alvarez at [email protected]
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