Briggs and Stratton Move Frees Up Working Capital

Milwaukee – August 17 -- Although Briggs and Stratton Corp. expects to lose $100 million in revenue this fiscal year from pulling some of its lawn and garden products from national mass retailers, the move came down to profitability, president and chief executive officer Todd Teske told The Business Journal.

The Wauwatosa-based manufacturer of small engines and outdoor power equipment made the announcement in April, effective in the company’s fiscal 2013, which began in July.

The company is no longer placing its walking lawn mowers and riding tractor mowers in national retailers, primarily Walmart, Lowe’s, Home Depot and Sears, Teske said.

“The profitability wasn’t where it needed to be,” Teske said in an interview. “Yes, it’s hard to take the revenue hit, but our margin profile will look a lot better if we don’t ultimately sell these products to the mass retailers.”

Although profits were down in its fiscal fourth quarter, Briggs and Stratton posted full 2012 fiscal year net income including restructuring charges of $29 million, or 57 cents per share, compared with $24.4 million, or 48 cents per share, in the previous year.

Consolidated net sales were $2.1 billion in fiscal 2012, a 2 percent decrease from the previous year. The company predicts fiscal 2013 consolidated net sales of $1.95 billion to $2.15 billion.

Teske called pulling lawn and garden products from national retailers an economic and competitive decision.

“There’s others in this industry who are in a better position from a profitability standpoint, and really their business models lend themselves to serving big-box retailers,” Teske said. “What we did was we said we’re better off putting our resources in other places and really supporting the folks that can serve those big-box retailers through our engine business.”

Briggs and Stratton has said the move is expected to free up $40 million to $80 million of working capital.

But customers still will be able to see the company’s diamond-and-bar logo at national chain stores. The company’s engines segment will continue to serve lawn and garden equipment manufacturers that provide products to these retailers, and Briggs and Stratton will still sell portable and standby generators and pressure washers through the U.S. mass retail channel.

The company also will focus more on selling higher-end lawn and garden products through its network of Simplicity, Snapper and Ferris dealers and regional retailers. Those dealers include Wales Lawn and Garden, and regional retailers include Mills Fleet Farm, Teske said.

“We think that we can really serve the market well from that perspective,” Teske said.

He stressed that the products being phased out of national mass retailers represent a “small segment of everything that we do.”

“We are not exiting lawn and garden, period,” Teske said.

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