Fastenal's Q1 Safety Sales Slowed as Fasteners Roared Back
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Exhibition Name: Fastenal's Q1 Safety Sales Slowed as Fasteners Roared Back
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The company closed another 46 branches in Q1 as it signed more Onsite locations amid continuing product mix normalization.
 

Fastenal reported its 2021 first quarter financial results on Tuesday, which were led by a significant normalization in the distributor's product mix after a year when the company's namesake fastener sales took a major backseat to sales of safety products needed amid the COVID-19 pandemic.

After gradually normalizing over the previous six months, Fastenal's product mix took a leap forward during the January-March period — especially in the latter portion. The Winona, MN-based distributor's daily sales of fastener products grew 4.0 percent year-over-year in Q1 and represented 32.5 percent of net sales. While that portion was still down from 32.9 percent in Q1 2020, it was a notable improvement from 30.8 percent of net sales in Q4 2020, when daily sales of fasteners were down 2.3 percent year-over-year.

That trend was especially apparent during March, when Fastenal's daily fastener sales soared 14.0 percent year-over-year against March 2020 — when the pandemic first spread across North America and rapidly sunk demand for fasteners amid rampant factory and construction shutdowns.

Meanwhile, Fastenal's sales of safety products were still elevated in Q1 at 14.7 percent year-over-year growth, but that was down nearly half the growth rate of Q4, while its percentage of net sales likewise fell from 23.5 percent in Q4 to 21.5 percent in Q1. Daily sales of Fastenal's other products grew 2.5 percent year-over-year in Q1 and represented 46.0 percent of net sales, compared to 47.3 percent of net sales a year earlier.

That normalization is a positive sign for industrial distributors and suppliers awaiting market recovery in their core fastener and MRO product categories.

"In March 2021 we experienced meaningful acceleration in demand for fastener products and meaningful deceleration in demand for safety products relative to what had been experienced in January and February 2021," Fastenal said. "We believe the shift that was evident in March 2021 may become more pronounced in the second quarter of 2021."

As a whole, Fastenal had Q1 total sales of $1.42 billion, up approximately 3.7 percent year-over-year and up from $1.36 billion in Q4 2020. Daily sales grew 5.3 percent in Q1, which had one less selling day than 2020. The company's gross profit of $643 million at 45.4 percent of sales (down from 46.6 percent in Q4) improved about 1 percent year-over-year, operating profit of $280 million at 19.6 percent of sales (19.7 percent in Q4) improved 3.3 percent and total profit of $211 million improved about 3.9 percent (9.7 percent growth in Q4).

Fastenal said the overall impact of product pricing on its Q1 net sales was 60 to 90 basis points, and the company noted rising pressures related to product cost inflation. Fastenal said it expects to take pricing actions in Q2 to mitigate these effects.

Source: Industrial Distribution
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