Fastenal To Open 40 To 60 Stores In 2016 As Q1 Sales Rebound

Fastenal had a slight Q1 profit dip from last year, but with solid yearly and sequential sales gains in Q1, the company says it is expanding store locations throughout this year after a period of consolidation.

Winona, MN-based Fastenal — No. 12 on Industrial Distribution's 2015 Big 50 List — reported its 2016 first quarter fiscal performance on Tuesday, highlighted by year-over-year increases in total and daily sales, while profit had a slight decrease. The company also touched on plans for store expansion after a period of consolidation.

The company posted Q1 sales of $986.7 million, a 3.5 percent year-over-year increase. Daily sales increased 1.9 percent as there was one more selling day than a year ago.

Daily sales were up 1.9 percent year-over-year, but sequentially, Fastenal's total sales increased 6.9 percent from Q4 and daily sales were up 5.5 percent. There was one more selling day this past quarter than a year earlier.

After two straight months of year-over-year monthly daily sales increase, Fastenal's March was flat compared to a year ago.

Meanwhile, Q1 profit of $126.2 million dipped 1.1 percent year-over-year, but rose 12.8 percent from Q4.

Fastenal said that after several years of holding back on store openings and some consolidation, it plans to expand its number of locations this year with a goal of opening 40 to 60 new stores in 2016. That would be about a 2 percent increase over its store count of 2,622 at the end of December. This would be a change from a 2015 in which the company net reduced its store count by 15, opening 41 and closing 56. In Q1, Fastenal opened 17 stores and closed 13, adding that most those closures were in multiple store markets with expiring leases and didn't meaningfully impact sales.

Here were the other biggest takeaways from Fastenal's earnings report:

  • Q1 daily sales to manufacturing customers rose 0.9 percent year-over-year after falling 2.2 percent in Q4, while sales to non-residential construction customers dipped 0.4 percent in Q1 after falling 6.1 percent in Q4.
  • In the first quarter, the company's fastener product line daily growth contracted 2 percent, while its non-fastener product-line daily growth improved to about 5 percent.
  • Fastenal installed 56.889 industrial vending machines in Q1 2016, up 2.6 percent from Q4 2015 and up 17.2 percent from a year earlier.
  • Total employee count at the end of Q1 was 20,509, up 6.7 percent from a year earlier, but the company trimmed its total employee count by 237 in Q1. "We expect to continue to hold back on headcount additions until daily sales growth rates move closer to mid-single digits," the company said in its earnings release.
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