Fastenal Co. said Friday that it will miss fourth-quarter earnings expectations because of weak sales, increased employee costs and lower-than-expected gross margins.
The average Wall Street estimate of 36 cents per share is not achievable, said Winona, Minn.-based Fastenal, which sells safety supplies and nuts, bolts and other fasteners to construction and manufacturing firms through retail stores and industrial vending machines. The fourth quarter is normally reported in March.
Fastenal shares fell $2.39, or 5 percent, to $45.62.
While manufacturing sales are improving, sales have been shrinking in heavy manufacturing, which requires fasteners for construction, military and mining equipment, the company said.
Gross profit has not increased enough to offset the costs of increasing the number of store employees, the company said. From May to November, the number of store workers has grown from 10,143 to 11,421.
Gross margins are below expectations because of lower use of Fastenal's trucks, lower supplier incentives, product mix and competition, the company said.
In the third quarter, Fastenal just missed analysts' earnings expectations because of sluggish construction and manufacturing sales.