The 2020 Mid-Year Economic Update_long

Fastenal Feeling Customers’ Pain

'Last mile' presence helps company navigate sagging demand.
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Though Fastenal's sales rose 3.6 percent last year, the company felt the effects of pain growing more severe across its customer base as 2015 wore on and the economy weakened, CEO Dan Florness told analysts during last week's earnings call.

In the first quarter of 2015, 72 of the Winona, MN-based company's top 100 customers grew, Florness said. That dropped to 63 in the second quarter, 56 in the third quarter and only 49 in the fourth quarter. In the fourth quarter, 37 of Fastenal's top 100 customers were down more than 10 percent, and 22 of that group were down more than 25 percent.

In December, Florness added, "we saw some shutdowns of our customers."

"We sell across the continent, around the planet. Most of our business is in North America, and we sell to a lot of different industries," Florness said. "And when you start looking through the list, a lot of names that you recognize standout and you can see the pain they are feeling in their business."

Because of customer contraction, the company said its fastener product line saw its daily growth decrease from about 10 percent growth in the last six months of 2014 to about 6 percent contraction in the fourth quarter of 2015.

Fastenal's nonfastener product line has seen daily sales growth decrease from about 18 percent growth in the last six months of 2014 to about 1 percent growth in the fourth quarter of 2015.

The company, however, managed the slowdown through a robust "last mile in this online world," Florness said. "We're a company that's built the last mile already. It's a very efficient last mile and how can we take that last mile, take our employees at the store, take our employees that are supporting the store and together grow a great business, that's what we focus on."

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