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Monro posts record sales, profit; to acquire Fla. stores

Rochester Business Journal
July 24, 2014

Monro Muffler Brake Inc. on Thursday reported record sales and net income in the first quarter, as well as a planned acquisition outside its existing footprint.

Sales for the first quarter ended June 28 increased more than 5 percent to $217.5 million, compared with $206.2 million a year ago. The increase primarily was because of sales from new stores and from acquisitions.

Net income increased nearly 25 percent to $16.9 million from $13.6 million. Diluted earnings per share increased to 52 cents from 42 cents, missing Street estimates.

Analysts had expected diluted earnings per share of 54 cents on revenue of $221.98 million for the quarter.

Comparable store sales—or sales at stores open at least one year—increased 1 percent in the first quarter, primarily for brakes and alignments.

The company added 19 locations and closed six locations during the quarter, ending the quarter with 966 stores.

“We were able to deliver EPS results within our expectations due to positive traffic in the quarter, the continued outperformance of our recent acquisitions and our ability to drive costs lower, which allowed us to expand operating margins by 230 basis points,” President and CEO John Van Heel said. “Despite the continued choppiness in the macroeconomic environment, we are pleased that consumers continue to turn to Monro for purchases that can no longer be delayed, as well as to perform basic maintenance on their vehicles.”

Monro also announced plans to acquire 35 the Tire Choice stores in Florida, a new state for the local company. With total annual sales of $64 million, the stores are located in major areas on the east and west coast of Florida.
 
Monro did not provide financial details of the purchase, which is expected to close in August.

For the second quarter, Monro expects a comparable-store increase of 2 percent, with diluted earnings per share of 50 cents to 52 cents.

For the full year, the company anticipates a comparable-store sales increase of 1 percent to 3 percent. Monro expects diluted earnings per share of $1.95 to $2.08, compared with $1.67 in the last fiscal year. The company expects sales for the year to reach $900 million to $920 million.

“Our long-term outlook for our industry and business remain positive, although we expect trends in our second quarter will likely continue to reflect the volatility we experienced in the first quarter as the economic environment weighs on consumer purchasing behavior,” Van Heel said. “We are confident that our long-term strategic plan and the flexibility of our business model will continue to deliver increased market share and shareholder returns regardless of the economic or operating environment.”

Shares of company stock (Nasdaq: MNRO) were down more than 1 percent at $50.82 in midday trading.

(c) 2014 Rochester Business Journal. To obtain permission to reprint this article, call 585-546-8303 or e-mail service@rbj.net.


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