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Monro beats estimates for earnings, logs record sales

Monro Muffler Brake Inc. on Thursday reported record second-quarter sales and net income, beating Street estimates for earnings.

Net income for the quarter ended Sept. 26 increased nearly 16 percent to $18.9 million from $16.3 million in the same quarter last year. Diluted earnings per share increased 14 percent to 57 cents from 50 cents.

Monro reported an 8 percent sales increase to $239.2 million, compared with $221.3 million for the second quarter fiscal 2015. Analysts had expected diluted earnings per share of 56 cents on revenue of $240.3 million.

Comparable store sales—or sales at stores open at least one year—increased 2.1 percent in the second quarter, primarily in the area of alignments.

“Sales trends have strengthened into October, with positive comparable store sales of approximately 4.2 percent month-to-date,” Monro president and CEO John Van Heel said. “Overall, we remain confident in our business model and in our ability to increase market share and deliver strong overall sales and earnings growth, regardless of the consumer operating environment.”

Sales from recently acquired stores added $17.5 million in the second quarter. In fiscal 2016 Monro has acquired 146 franchised Car-X locations in 10 states, as well as four Windsor Tire Co. Inc. stores in Massachusetts and 27 Kost Tire & Auto Care locations in New York and Pennsylvania. Combined, the 31 Windsor and Kost stores are expected to add some $31 million in annualized sales.

For the six-month period, Monro’s sales increased more than 8 percent to $475.7 million from $438.8 million a year ago. Comparable store sales improved 0.8 percent, while net income for the first six months increased more than 13 percent to $37.7 million, or $1.14 a diluted share.

Monro expects third-quarter sales to be $247 million to $254 million, with a comparable-store sales increase of 2 to 4 percent. The company expects diluted earnings per share of 53 cents to 58 cents, compared with 49 cents in the third quarter last year.

For the full year Monro anticipates sales to be $955 million to $970 million, with a comparable-store sales increase of 1.5 percent to 2.5 percent. The company has narrowed its diluted earnings per share guidance to $2.07 to $2.17, compared with $1.88 a share in fiscal 2015.

“We are encouraged by the improvement in our traffic and comparable store sales, which, combined with the successful integration of our recent acquisitions, has helped us deliver significant operating margin expansion in the first six months of the fiscal year,” Van Heel said. “As we move forward, we will continue to actively manage our business through this choppy environment to drive strong bottom line results.”

Van Heel noted the company remains encouraged by opportunities for additional acquisitions in the second half of fiscal 2016.

Shares of company stock (Nasdaq: MNRO) reached a 52-week high today—$74.09—and was trading up nearly 3 percent at 3:45 p.m. at $72.80 a share. Earlier this month analysts with Zacks Investment Research had rated Monro a “buy.”

(c) 2015 Rochester Business Journal. To obtain permission to reprint this article, call 585-546-8303 or e-mail rbj@rbj.net.


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