Monro, Inc. saw a decrease in sales for the second quarter of its fiscal year as consumers opted for lower-priced tire options and put off undercar maintenance.
Sales dipped 5.1 percent to $329.8 million for the Rochester-based company, compared to $347.7 million for the second quarter of the fiscal year that ended on March 26, 2022. The total sales decline of $17.9 million was due primarily to the divestiture of the company’s wholesale tire and distribution assets.
Comparable store sales increased 1.3 percent for the quarter, with small or underperforming stores seeing an increase in sales of approximately 10 percent. That’s in contrast to a jump of 14.8 percent in comparable store sales for the second quarter of the previous fiscal year.
Comparable store sales increased approximately 6 percent for tires and 1 percent for maintenance services year-over-year, while there was a 5 per cent decrease in sales of brakes and front end/shocks and 8 percent for alignments.
“Given the challenges of the current macro environment, we saw stretched consumers trade down to lower-priced tire options and defer vehicle maintenance in some of our key service categories,” Mike Broderick, president and CEO of Monro, said in a news release.
Broderick said the company opted not to pass along all increases in parts costs to consumers.
“In an effort to build a longer-term relationship with our customers, we made an intentional decision to not fully offset parts inflation through additional increases in price,” he said. “We also maintained the critical investments we’ve made in our labor force in order to preserve our long-term service model.
“Although our investments in price and labor impacted our gross margin, we gained market share in our tire category in the second quarter. Supported by strong performance in our tire category as well as improving trends in our service categories, we are seeing positive signs that the consumer deferral cycle might be coming to an end.”
Net income for the second quarter was $13.1 million, compared to $21 million in the same period of the prior year. Diluted earnings per share for the second quarter was $.40, compared to $.62 in the second quarter of fiscal 2022. Adjusted diluted earnings per share, a non-GAAP measure, was $.43, with a majority of the $.03 per share of excluded costs coming from restructuring and elimination of certain executive management positions upon the completed divestiture of the Company’s Wholesale locations and tire distribution assets.
Monro ended the quarter with 1,297 company-operated stores and 80 franchised locations.
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