Fastenal posts earnings decline

Winona, Minn.-based Fastenal reported net earnings of $48.7 million for the quarter ended March 31, a decline of 28.5% from the same quarter last year. Net sales for the three-month period declined 13.6% to $489 million.

Fastenal opened 33 new stores in the first quarter, bringing its total store count to 2,342.

The downward results come as the company enters its third year of a "Pathway to Profit" initiative, which calls for less focus on store growth and more on store profitability by investing in its sales force. In the company's recent annual report, president and CEO Willard Oberton said the "Pathway to Profit" goal was to slow the store openings from the 13% to 18% range to about a 7% to 10% range, using the money saved to add outside salespeople at the company's best performing stores.

In the poor building environment, Fastenal temporarily slowed store openings to the 2% to 5% range -- "and we have stopped adding any head count except for store openings and for stores that are growing," the company said today.

"Over the last several years, our 'Pathway to Profit' initiative has slowly altered our cost structure, in that a greater portion is now variable versus fixed. This has helped us today as we navigate through the current economic environment," according to the company's news release.

The company's “Pathway to Profit” initiative has a stated goal of increasing pre-tax profit, as a percentage of sales, by one percentage point per year for the five-year period from 2007 to 2012. The company achieved this goal in 2008.

"In 2008 we invested less in brick-and-mortar and more in people -- specifically, people who contribute directly to sales," said Oberton.