After a weak third quarter in which sales grew only 1.5 percent, Fastenal's leadership isn't "real optimistic" that the economic conditions dampening growth for the distributor will "bounce back quickly," according to outgoing CEO Will Oberton.
"The industrial environment is in a recession," new CEO Daniel Florness said in a call to discuss the third-quarter results. "I don't care what anybody says, because nobody knows that market better than we do."
Florness, who currently serves as CFO, will succeed Oberton, effective Jan. 1, 2016. Earlier this year, Oberton retook the reins as CEO from Leland Hein, who had been appointed in December 2014.
Industrial fastener sales, about 40 percent of overall sales, fell 4.4 percent in the quarter from declines in volume and deflation in the markets. Non-fastener sales grew 5.9 percent.
In addition, many of the company's largest customers scaled back their purchases, with 44 of its top 100 customers in the negative. Sales to 32 of them were down more than 10 percent, while 17 were down more than 25 percent.
"That's a sign of a recessionary environment," Florness said.
But that's not stopping the distributor from investing in growth. "The attitude at Fastenal, the mindset that we're in right now is a mindset of: We need to create our own luck," Oberton said.
Oberton identified four areas of investment that the company plans to use to create that luck: stores, vending, onsite stales and the Web platform. The number of FAST Solutions machines increased 17.4 percent to 53,547. More details about the plans for investment will be released at Fastenal's investor event on Nov. 5.
Fastenal also continues to grow its headcount, adding "just over 1,300" in the last 12 months, according to Florness. And investment in people will continue to be a core strategy.
Fastenal also garnered some attention last week when it agreed to settle an employment discrimination lawsuit for $1.25 million. In addition, the distributor agreed to hire 171 people from the protected class identified in the class action lawsuit. Fastenal did not admit liability with the settlement.