4/8/2013 1:17:00 PM
NEWS BRIEF
Benchmarking
“At a suggestion, we asked a couple benchmarking questions.”
“First, what is average ticket size? At the retail level, the answer fell into the $300-$330 range.”
“Second, what is the cost per sales call. Again, at the retail level the median cost was ~$75.”
What does this mean for other distributors?
“We think this reading suggests that March may exhibit the typical seasonal improvement. It does not translate into a better than seasonal showing, which would suggest accelerating growth.”
“That is largely how we have modeled Fastenal, so we would not expect a top line surprise in that name based on March. Grainger, and to a lesser extent possibly MSC Industrial, is a harder read because the government exposure may partially offset the otherwise decent industrial backdrop.”
The BB&T Capital Markets Fastener Distributor Index (FDI) in March increased to 52.8, “a good if unspectacular number” indicating gradual market recovery.
“After sharp moves in January/February, which made sense directionally but with wider swings than we imagined, March suggests slow growth.”
However, the average reading in the opening quarter of 2013 is the best since the second quarter of 2012.
Sales (58.3, vs. 48.7 in Feb.) improved while supplier deliveries were a little slower, suggesting “a bit better demand.”
“We believe this is a good reading. It is not robust, but it… should ease worries, and be a comfortable environment in which to operate.”
Meanwhile optimism “bounced back” in March. While the ratio of respondents pessimistic about the six-month outlook remained low and largely unchanged (13.9%, vs. 10.3% in February), many cautious respondents shifted back to optimistic in March (63.9%, vs 38.5% in February), according to the FDI.
“The outlook has been solid the last four months, and the percentage of respondents expecting higher activity in six months is at its highest level since March 2012.”
But sequential pricing remains meager, and while annual pricing remains up, the range looks to be up 0%-1%.
“Pricing in the fastener industry remains largely directionless, as the degree of demand improvement thus far in 2013 seems to be insufficient to inspire fresh hikes.”
The FDI is a monthly survey of North American fastener distributors. As a diffusion index, readings above 50 signal strength and below 50 signal weakness.
The FDI is a joint production of BB&T Capital Markets and the FCH Sourcing Network, the online network for industrial fasteners. ©2013 GlobalFastenerNews.com
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