) released decent sales results for the month of November wherein
net sales rose 3.1% year over year to $621.3 million. Currency
was a 0.4% headwind.
November daily sales grew 8.2% to $13.1 million, showing an
improving trend from growth rates of 2.9%, 7.2%, 5.7% and 7.7% in
the months of July, August, September and October, respectively.
The daily sales growth was flat from November last year.
Fastenal serves customers in the manufacturing and
non-residential construction markets.
Daily sales to manufacturing customers (representing almost
50% of revenues) grew 8.7%, better than 7.6% in October. However,
daily sales to non-residential construction customers
(representing 20% to 25% of revenues) grew 4.4%, slowing down
slightly from 5.4% in October; possibly due to the present
slowdown in the housing recovery.
The national distributor of industrial/construction supplies
has been struggling with its top line due to lower sales of its
fasteners product line which is being hurt by end-market slowdown
and broader economic uncertainty. Moreover, the non-residential
construction and vending businesses have also been soft for the
past two quarters.
In order to improve its top line, stores are being encouraged
to focus on improving near-term sales. Fastenal took the
strategic decision to increase sales personnel at its stores to
boost sales. In the third quarter, the company recruited 400
sales employees; increasing the headcount by 4.6% sequentially.
It plans to consistently add store-level employees per month for
the rest of 2013.
This strategy aims to free sales managers to focus more on
selling which could drive near-term sales growth. Moreover,
management temporarily slowed down focus on vending in order to
improve near-term sales.
These efforts seem to be paying off as the company saw
improving daily sales trends in both October and November.
Moreover, vending is expected to be ramped up again in 2014
once the desired store staffing level is reached. Under the
vending program, Fastenal installs vending machines called FAST
solutions at customer's location and keeps it filled with
products they need.Moreover, under its new vending improvement
program, management aims to improve the quality of vending
In addition, Fastenal has plans to reinvigorate the
high-margin fastener business and improve sales performance at
under-performing stores. The company also plans to expand its
store-based inventory for fasteners, construction and safety
products. Moreover, Fastenal hopes to gain from a new pricing
system for stores and improved operational efficiency across its
distribution network (by adding significant automation).
Fastenal carries a Zacks Rank #4 (Sell). Better-ranked stocks
in the building products/ building construction sector include
Liquidators Holdings, Inc.
Builders FirstSource, Inc.
CaesarStone Sdot-Yam Ltd
). While Lumber and CaesarStone carry a Zacks Rank #1 (Strong
Buy), Builders FirstSource holds a Zacks Rank #2 (Buy).
BUILDERS FIRSTS (BLDR): Free Stock Analysis
CAESAR STONE SD (CSTE): Free Stock Analysis
FASTENAL (FAST): Free Stock Analysis Report
LUMBER LIQUIDAT (LL): Free Stock Analysis
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