Winona, Minn.-based Fastenal Co. reported sales and earnings gains both in excess of 20% in the third quarter ended Sept. 30. The company's net sales increased 20.4% to $726.7 million, while net earnings increased 29.1% to $96.8 million.
The distributor and retailer of specialty building products and fasteners slowed down its aggressive store growth plans, but still opened 94 stores in the first three quarters. Meanwhile, the company's vending machine initiative, where Fastenal machines are placed in factory locations to distribute key products to workers, continues to grow rapidly.
The company previously announced plans to open 150 to 200 stores in 2011, which would have been an annualized growth rate of 6% to 8%. The company now expects to open 115 to 125 total news stores in 2011, an increase of 4.6% to 5%. In 2012, the growth rate is expected to be 4% to 6%.
The company had 2,584 stores at the end of the quarter.
The trimmed-down growth rate is in keeping with a metric that Fastenal follows closely: the Purchasing Manufacturers Index, a composite index of economic activity in the manufacturing sector, published by the Institute for Supply Management. The figure was 51.6 in September 2011, compared with 55.3 in September 2010.
The importance of vending machines as a distribution tool is growing, the company said.
The number of vending machines installed in the third quarter were 5,732. The number has grown rapidly, up from 4,009 in the second quarter, and up from 148 in the first quarter of 2009. Percent of total net sales to customers from vending machines increased accordingly to 13.3% in the third quarter.
"We have made significant progress in the development of automated solutions (industrial vending) for our customers," according to the company's statement. "We believe these solutions have the potential to be transformative to industrial distribution."