Monro Muffler Brake Inc. on Thursday reported a drop in net income in the fourth quarter as sales rose 10 percent.
The automotive undercar repair and tire service chain logged sales $252 million, up from $229 million a year ago. Net income for the quarter was $9.7 million, compared with $13.9 million a year ago.
Diluted earnings per share for the quarter ended March 25 were 29 cents, compared with 42 cents a year ago, falling short of Street estimates. Analysts surveyed by Zacks Investment Research had forecast earnings per share of 35 cents on revenue of $258.04 million.
Fourth-quarter comparable-store sales—or sales at stores open at least one year—fell 8 percent, compared with a 0.5 percent increase in the fourth quarter a year ago. Comparable-store sales were down primarily in the tire category.
During the quarter, Monro opened 24 locations and closed four. The company operates more than 1,100 stores in 27 states.
Net income for the full year was $61.5 million, or $1.85 a diluted share. That compares with $66.8 million, or $2 a diluted share, in fiscal 2016.
For the full year, Monro posted a net sales increase of more than 8 percent to $1.02 billion, compared with $943.7 million for fiscal 2016. The sales increase primarily was from new stores. Comparable-store sales decreased 4.3 percent in fiscal 2017.
“The combination of unseasonable weather and a difficult consumer spending environment resulted in a decline in our comparable store sales, which reduced our profits for the fourth quarter and the full fiscal year,” President and CEO John Van Heel said in a statement. “As we enter the first quarter of fiscal 2018, our comparable store sales have improved and are up quarter-to-date, led by higher average ticket.”
In March, Monro completed its acquisition of 16 stores from a Car-X franchisee, including 13 in Illinois and three in Iowa. The stores are expected to add $15 million in annualized sales.
For the first quarter, Monro expects sales of $270 million to $275 million and a comparable-store sales increase of 2 to 3 percent. The company expects EPS in the range of 52 cents to 56 cents for the quarter.
The company expects fiscal 2018 sales to be $1.125 billion to $1.155 billion, with a comparable-store sales increase of 2 to 4 percent. Monro anticipates diluted earnings per share of $2.10 to $2.30 for the full year.
“Following a year of significant acquisitions, we are entering fiscal 2018 well-positioned to benefit from these recent transactions and improving sales trends, which we expect to be driven in part by higher tire average ticket,” Van Heel said, adding Monro will continue its greenfield expansion, as well as complete additional acquisitions.
Shares of company stock (Nasdaq: MNRO) were up nearly 4 percent at $51.85 in midday trading.
Monro’s board of directors has approved a 1 cent increase in the company’s cash dividend for the first quarter of fiscal 2018 to 18 cents. The quarterly dividend will be payable on June 12 to shareholders of record as of June 2.
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