|PRINT | CLOSE WINDOW|
Despite an increase in first-quarter sales, Monro Muffler Brake Inc. on Thursday missed Street estimates for earnings and revenue.
Net income for the quarter ended June 29 increased nearly 17 percent to $13.6 million from $11.6 million last year. Diluted earnings per share rose nearly 17 percent to 42 cents from 36 cents in the first quarter last year.
First-quarter sales increased nearly 22 percent to $206.2 million from $169.2 million a year ago. Comparable-store sales—or sales at stores open at least one year—increased 1.2 percent in the first quarter.
Analysts had expected diluted earnings per share of 45 cents on sales of $210.6 million.
Shares of Monro stock (Nasdaq: MNRO) late-afternoon were trading down more than 7 percent at $44.82.
“Our first-quarter performance continues to reflect the volatility associated with the economic environment that has been weighing on our customers, with the positive comparable-store sales trends we experienced in April and early May softening in the final six weeks of the quarter,” President and CEO John Van Heel said.
Customers have continued to defer purchases and trade down from higher-cost maintenance and repair purchases, Heel added, resulting in flat or slight increases in comparable-store sales in key categories.
“While we are disappointed with our comparable-store sales increase, our recent acquisitions contributed to earnings and outperformed our plan,” he said. “Importantly, our focus on leveraging our strong business model to take advantage of increased acquisition opportunities enabled us to increase our market share and deliver strong increases in overall sales and net income despite the tough environment.”
Monro also announced plans to purchase 10 service stores in the Washington, D.C., area. It has signed an agreement to purchase 10 Curry’s Auto Service stores. Financial details of the transaction were not disclosed, but the new stores post $18 million in sales annually. Monro plans to retain all store-level employees and expects to close the deal next month.
For the second quarter, Monro expects a 0 to 2 percent increase in comparable store sales, with diluted earnings per share of 41 to 45 cents, compared with 36 cents per share reported in the second quarter last year.
For the full year, the company anticipates an increase in comparable-store sales of 1 to 3 percent and has revised its anticipated 2014 diluted earnings per share to $1.58 to $1.70, compared with $1.32 per share in fiscal 2013.
“While our long-term outlook for our industry and business remain positive, we anticipate that trends may remain choppy for the balance of our second quarter as a result of the economic environment,” Heel said. “In this environment we are actively managing our business, with a focus on driving top-line growth and leverage through acquisitions while aggressively managing costs.”
Heel added the company expects trends to improve in the second half of fiscal 2014 as customers return to Monro for purchases that can no longer be delayed.
(c) 2013 Rochester Business Journal. To obtain permission to reprint this article, call 585-546-8303 or e-mail firstname.lastname@example.org.