Will Oberton, CEO of Fastenal said days ago that a declining trend for the gross margin was seen in the company and he felt “not optimistic” to the following result. It is reported that 85% of the quarterly decline was transactional and 40% of the transactional drop was due to the product mix. Oberton added that the fasteners (which should be the one to generate the highest gross margin) increased by only 1% in the quarter, while the other non-fastener products (which are traditionally considered to generate lower gross margins), on the contrast, increased by 12%. The uneven proportion between them must be taken into serious consideration.

Oberton said that compared to the slowly growing sales with small customers, the sales with other large sized customers shows a better growing trend. However, the gross margin the large sized customers can bring is comparatively lower. Oberton added, with the pressure from competitors and customers’ demand for price reduction, the gross margin most companies (including Fastenal) can create is thus reduced. Oberton thinks that only when the market condition turns well, otherwise, the pressure from customers and competitors will still be there.

News

Mexico drives North American auto investment, challenges China

2013-11-01

◀

▶