Monro Muffler Brake Inc. on Tuesday reported increased sales for the fourth quarter, a result of improved sales from new stores. The quarter, however, saw a drop in profits.
Sales for the quarter ended March 30 increased more than 14 percent to $195.9 million, compared with $171.7 million in 2012.
Net income for the fourth quarter fell nearly 23 percent to $8.1 million from $10.5 million in the same quarter last year. Diluted earnings per share fell more than 24 percent to 25 cents from 33 cents a year ago.
Analysts had expected diluted earnings per share of 25 cents on sales of $189.92 million.
Shares of company stock (Nasdaq: MNRO) were up nearly $4 to $48 a share in mid-morning trading.
Adjusted for days, comparable store sales—or sales at stores open at least one year—decreased 5.6 percent, compared with a comparable store sales increase of 0.7 percent for the same period last year.
“Our fourth-quarter performance reflects the continued impact of the challenging economic environment that has been weighing on our customers,” Monro president and CEO John Van Heel said. “Given the environment, our customers continued to defer purchases and trade down from higher cost automotive maintenance and repair purchases.”
Van Heel also noted that weather conditions remained less than ideal for the business, which affected comparable store sales for the quarter, particularly in January.
“Our ability to leverage our strong business model, regardless of the economic or operating environment and to take advantage of increased acquisition opportunities, is demonstrated by the record of eight acquisitions for 139 stores that we completed in fiscal 2013,” Van Heel added. “These acquisitions enabled us to deliver healthy growth in overall sales for the fourth quarter despite the decline in comparable store sales, while helping us increase our market share and achieve greater economies of scale.”
For the full year, Monro’s net sales increased nearly 7 percent to $732 million from $686.6 million in 2012. Adjusted for days, comparable store sales fell 5.5 percent for the year. Net income for the year decreased more than 22 percent to $52.6 million, or $1.32 a diluted share, compared with net income of $54.6 million, or $1.69 per diluted share, for fiscal 2012.
Analysts had expected diluted earnings per share of $1.32 on sales of $727.12 million.
For the first quarter, Monro expects a comparable store sales increase of 3 percent to 4 percent, with diluted earnings per share of 42 to 46 cents, compared with 36 cents for the first quarter 2013.
“As we look to fiscal 2014 we continue to have a positive long-term outlook for our industry and company and are more optimistic about the near-term based on the recent trends we have seen in our business,” Van Heel said.
Monro’s board of directors has approved an increase of a penny in its cash dividend for the first quarter 2014 to 11 cents a share. The cash dividend is payable on June 11 to shareholders of record as of May 31.
Separately, the U.S. Department of Labor has cited Monro’s Portsmouth, N.H., facility with numerous serious, willful and repeat OSHA violations totaling $221,100. The violations included citations for an unsanitary bathroom, no eye wash station near corrosive materials, exposure to electrical shock from live wires in bathrooms and damaged ladders, among other things.
The citations were issued May 15 and most of the violations were corrected at the time of inspection, Department of Labor paperwork shows.
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