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Lowe’s recently ended Flex’s cordless power tool promotions a month early, and has been pulling inventory off their sales floors.
With the deal, which was supposed to end on 1/31/24, you could buy a select Flex cordless power tool and receive a free bonus tool or accessory.
A Lowe’s store associate reported on the stop-sale, with other saying Flex was “restricted from sale,” they “pulled so much Flex today,” and “so that’s why there are carts full of Flex tools in receiving.”
I asked both Lowe’s and Flex to comment about the “stop-sale.” In my inquiry to Flex, I also asked if this was related to the “leaking batteries” customers are complaining about on social media and YouTube.
Lowe’s has not yet replied to my inquiry.
The partner in question is currently refreshing the FLEX assortment with focus on our industry leading Stacked Lithium Battery Technology and new Compact Series.
By Compact Series, they’re referring to the Flex cordless power tools that were announced in January 2023 with spring 2023 availability.
This strikes me as highly unusual.
As part of my research for a different potential story, I started looking at recent financial reports of publicly-traded companies, to see how they’re doing as we enter 2024.
Chervon, Flex’s parent company, issued a mid-year report on 9/26/2023:
For the six months ended June 30, 2023, the Group’s largest customer and five largest customers accounted for approximately 32.0% and 59.0% (six months ended June 30, 2022: 41.1% and 63.6%) respectively of the Group’s total revenue.
Lowe’s carries Chervon’s Skil, Ego, and Flex brands, and Chervon is also an OEM for Kobalt 24V cordless power tools. It’s reasonable to presume that Lowe’s is Chervon’s largest retail customer.
Chervon’s North America revenue for the same 6-month period was said to be $485 million out of $739 million overall, down from $696 million out of $1.00 billion overall for the same period in 2022.
The product category breakdown is interesting – Chervon had $286 million in power tools revenue (from the same $739 million overall) for the first 6 months of 2023, compared to $401 million for the same period in 2022. They also reported a decrease in the outdoor power tools segment.
We reported on Lowe’s Black Friday 2023 tool deals, and I was extremely surprised that Lowe’s did not include Flex or Skil products in the sales flyer.
In November 2023, Flex’s parent company issued a profit warning to investors. They said that:
for the first ten months ended October 31, 2023 (the “Period”) and information currently available, the Group expects to record a decrease in its net profit by approximately 80%… [compared to] the corresponding period in 2022.
They attributed this to multiple factors, including:
a decline in revenue caused by more conservative inventory policies adopted by the Group’s key customers facing macroeconomic uncertainties
I recently reported that Lowe’s stores were full of holiday tool deal inventory in December.
A Flex marketing representative has affirmed that the brand’s initial assortment [of cordless power tools] will still be “available in the market both in store and online through many retailers.”
So while Lowe’s is “discontinuing some of the original SKUs” and transitioning to Flex’s Stacked Lithium batteries and compact tools that launched in early 2023, Flex is not.
To be clear, nothing is being made obsolete on our side.
Let’s summarize everything so far:
i) Flex’s parent company reported lower revenue for the first 6 months of 2023 compared for the same period in 2022.
ii) Several months later, they issued a profit warning.
iii) Lowe’s did not advertise any Flex deals in their official Black Friday sales flyers – at least not that I saw in any of the ones I downloaded and analyzed from Lowe’s website in November.
iv) In late December, Lowe’s associates pulled promotional inventory from stores, and the same tools were removed from the lowes.com website, more than a full month before the deals were set to expire.
This all seems highly usual to me.
If such a reset or refresh was planned for December 2023, why did Lowe’s set the promotion to expire on 1/31/24?
Or, why didn’t they discount the outgoing tools rather than sweep them out of Lowe’s stores and off the website, similar to what they did at the start of the year to clear out remnant Stack Pack tool box inventory?
When Chervon launched their Flex 24V Max line of cordless power tools, the tools – Lowe’s exclusives at the time – were described as being more powerful than competitors’ and delivering “the absolute best in terms of power, runtime, and recharge time.”
They promised “unrivaled power,” and features such as turbo modes and anti-kickback tech.
It seems that it’s some of those same tools and batteries that have now been discontinued at Lowe’s stores, and Lowe’s is focusing on Flex’s compact tools.
Cordless power tool refreshes do happen on occasion.
I suppose this means “unrivaled power” is out, and compact (for a 24V class power tool) is in.
But what would you think if Home Depot stripped Milwaukee M18 Fuel flagship cordless combo kits from their stores and website a month before the best deals of the year were set to end?
Or, what if Home Depot removed Dewalt 20V Max Atomic series cordless power tools from their stores and website?
Would either of those scenarios be “business as usual”?
So far no one at Flex has answered any my questions about the “leaking batteries” issue that’s been reported on social media and YouTube.
I don’t think that’s related, as s potential issue with older-style batteries wouldn’t drive Lowe’s to “discontinue some of the original SKUs.”
Maybe Lowe’s executives shopped at Home Depot over the holiday season, saw how well Dewalt PowerStack and Milwaukee Forge deals were selling, and said “give us more of that!”
Pairing the Stacked Lithium batteries with compact – and lighter duty – tools might be a way to keep costs competitive and appealing.
I can’t tell you what all this means, or if there are additional pieces to the puzzle that I missed, but none of it seems typical.