Fastenal 3Q Profit Drops 42% On Slack Construction Demand
DOW JONES NEWSWIRES
Fastenal Co.'s (FAST) third-quarter earnings dropped 42%, falling just short
of expectations, as demand remained slack in construction businesses that fuel
the company's profits.
Shares fell 1.9% premarket to $38.69.
The distributor of fasteners and other industrial and construction supplies
said the weakened economy has had "a substantial impact" on sales, especially in
its industrial production and nonresidential construction businesses.
The company had mostly resisted the effects of recession until a year ago,
when sales started slumping as the financial crisis hit full-steam. Fastenal has
since tried to cut costs by reining in store openings, slashing jobs and
enacting a hiring freeze except in new or growing stores.
Fastenal reported a profit of $47.6 million, or 32 cents a share, down from $
72.9 million, or 49 cents, a year earlier. Revenue decreased 22% to $489.3
million.
Analysts polled by Thomson Reuters had forecast earnings of 33 cents on
revenue of $489 million.
Gross margin for the quarter fell to 50% from 52.9%.
The company said September sales from all stores, regardless of age, declined
21% from a year earlier. Sales have seen a decline from year-earlier numbers
every month this year. Fastenal has opened 45 stores through the first three
quarters of 2009, compared with 140 openings during that period in 2008. The
company operates 2,352.
In April, Fastenal said it had slowed new store openings to an annual rate of
2% to 5%, compared with a growth rate of 7.5% in 2008. The company has said it
plans to resume opening stores at a rate of 7% to 10% next year if the economy "
remains somewhat stable."
-By Nathan Becker, Dow Jones Newswires; 212-416-2855; nathan.becker@
dowjones.com
(END) Dow Jones Newswires
10-12-090847ET
Copyright (c) 2009 Dow Jones & Company, Inc.
|