Fastenal Company FAST recently released its August sales report, wherein average daily sales or ADS grew 9% to $24.1 million compared with 9.7% growth registered in July 2021 and 2.5% in the year-ago period. Daily sales on a seasonal basis were up 3.1% compared with the company’s benchmark (historical five-year average) of 3.3%. Issues like price inflation, supply chain challenges and shortage of labor are negatively impacting its growth rate.
Although August sales have moderated sequentially in its major end markets and key product categories, safety products registered improvements.
Meanwhile, Fastenal’s overall August sales of $531.1 million were up 14.2% year over year. For July, net sales growth was 4.7% for the company.
End-Market Perspective, Product Lines & Customers
From an end-market perspective, manufacturing sales improved 19.7% for the month against a 5% decline a year ago. Non-residential construction grew 10.1% versus a 13.7% decrease reported in August 2020. The average daily sales growth rate in non-residential improved sequentially in August, while that of manufacturing end markets declined.
Fastenal derives sales from Fasteners, Safety and other product lines. Fasteners witnessed 18.9% growth in sales last month versus a 7.3% decline registered in the year-ago period. The monthly sales data reflects that fasteners sales trend has decreased. The figure was up 24.4% in June, 22.3% in July and 18.9% in August. Safety products declined 3.8% in August, much narrower than the 5.4% decline in July. In the year-ago period, safety categories improved 35.1%.
In terms of customer/channel, National account daily sales growth advanced 17% in August from a year ago, given the fact that 77% of the top 100 accounts and 65.7% of public branches are expanding. Yet, non-national accounts were down 1% year over year for the month. In the year-ago period, daily sales growth in non-national accounts was 6% year over year.
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Shares of the company have gained 10.4% so far this year, underperforming the industry’s 20.8% growth. The above-mentioned headwinds have been offsetting the benefits from its growth initiatives such as mobility and branch optimization. We believe this Zacks Rank #3 (Hold) company — which shares space with Beacon Roofing Supply, Inc. BECN, Builders FirstSource, Inc. BLDR and Tecnoglass Inc. TGLS in the same industry — is well positioned to navigate through these challenges with the onsite branch business. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.