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