Stanley Black & Decker Aims for 35% Margin by 2027

Stanley Black & Decker (NYSE:SWK) is targeting a gross margin of 34% to 35% in 2027, President and CEO Chris Nelson told investors at Baird's Global Industrial Conference. The company already reached a 35% margin in the third quarter, even after excluding tariff refunds, alongside roughly 4% organic growth. Its three core brands — DEWALT, STANLEY and CRAFTSMAN — each posted organic growth for two consecutive quarters.

What does the 2027 target rest on?

Nelson framed the plan around brand growth, product development and simpler supply chains. He said he does not anticipate major changes in the company's markets next year. Stanley Black & Decker also expects to return to a selling, general and administrative expense run rate of about 23%, after using tariff refunds to pull spending on salespeople and brand advertising forward from 2027 into 2026.

The company has reorganized around brands rather than individual product lines. Under the earlier structure, separate teams developed products such as drills and saws before deciding which brand to attach them to. Now the company starts with a brand's positioning and works backward to the products and investments that serve its target customers. Nelson said development cycle times have fallen 30% over the past two years, helped by common components across products that reduce supply-chain complexity and speed new releases. New products must follow the platforming approach, and the company is beginning to apply common components to existing lines. The resulting material productivity, he said, is an important part of the margin expansion opportunity.

Where is the growth coming from?

• DEWALT. The U.S. construction and industrial channel has grown at a double-digit rate, and Nelson believes the company is growing faster than the market. Construction activity, including data center projects, supports demand, though he does not view the opportunity as dependent solely on data centers. The company is investing in specialists who work with tradespeople and distributors, plus outreach to younger professionals through trade schools and social media. Company data show customers already on a battery system are more than 80% predisposed to stay in that ecosystem when buying another tool.
• CRAFTSMAN. The focus is do-it-yourself customers — garages, gardens, home renovations. Nelson described the DIY market as more stable than he expected, though not a growth engine, and said CRAFTSMAN can gain share as the brand's purpose sharpens.
• STANLEY. The company has been refreshing products and adding support for hand-tool wholesalers, particularly in Europe.

What happens to prices and capital?

Inflation accelerated somewhat toward the end of the year, Nelson said, and the company expects to take some price increases regardless of what happens with tariffs. He described the potential increases as low-single-digit and said the company would work with channel partners to maintain growth.

On capital allocation, investing in growth remains the priority. Any acquisitions would be bolt-on deals supporting the organic strategy rather than transformational transactions. The company plans to maintain and moderately grow its dividend. It completed a $500 million share repurchase, and its board authorized another $1 billion program, which Nelson said the company will use opportunistically as it weighs investment opportunities.

The plain takeaway: a 35% margin already in hand, a 30% faster development cycle and $1 billion of fresh buyback authority give Nelson a concrete bridge to 2027.