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Recently on this blog, I wrote about how Fastenal, No. 9 on MDM's list of top 40 industrial distributors, plans to drive its operating margins higher by increasing the amount of revenue each store brings in, which is part of its "Pathway to Profit" plan.
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In its third-quarter earnings release this week, Fastenal further detailed progress of its "Pathway to Profit." As Fastenal says in a press release, the distributor used store openings as the primary growth driver of its business for about 10 years up until April 2007, when it reevaluated its model to focus on getting more out of individual stores and slowing new store growth. The distributor said its "Pathway to Profit" initiative has allowed it to focus on: store headcount, store or unit growth, and average sales volume per store. The goal, as we detailed in this blog, is to grow sales of its average store to $125,000 a month.
Fastenal said its gross profit percentage for the first nine months of 2010 increased from the same period in 2009. Third quarter gross profit percentage was 51.8 percent, compared with 50 percent in 2009.
Other updates from Fastenal in its latest release:
- In the third quarter, the distributor opened 45 new stores. The plan is to open 80 to 95 new stores total in the second half of 2010. Since the first quarter of 2007, store count is up 18.3 percent, and store headcount is up 26.2 percent.
- Fastenal has reduced its "full-time equivalent" headcount at store locations by 10 percent since its peak of 8,280 in the third quarter 2007. Most of the decrease relates to a reduction in part-time hours worked. Absolute headcount numbers declined by 5.3 percent in the same time period.
- Fastenal's average store had sales of $71,600 per month in the third quarter of 2010, compared with $61,600 a store in 2009.