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.
Monro Inc., the local automotive undercar repair and tire services dealer, has expanded its collaboration with Amazon.com.
Monro will provide tire installation services at more than 330 additional service locations in 10 states across the Eastern U.S., company officials announced Thursday. The service was launched in July in the 52 greater Baltimore area stores and has expanded to Georgia, Florida, Illinois, Indiana, Ohio, Maryland, Michigan, New York, Tennessee and Virginia.
Customers who shop for tires on Amazon can choose the ship-to-store option to have a Monro facility in their region install the tires. In the next year, Monro plans to make the service available to Amazon customers at more than 1,170 retail locations in 28 states.
Monro President and CEO Brett Ponton said the company was pleased with the Baltimore pilot.
“Our preferred tire agreements with online retailers are a key initiative of our omni-channel strategy, and this expanded collaboration underscores the strong progress we have made as we continue to develop our online presence,” Ponton said in a statement.
Earlier this year, the company launched a new business strategy, Monro.Forward, which focuses on driving operational excellence and delivering a consistent best-in-class customer experience. The Amazon partnership is a key component of that strategy, officials said.
Last year, the 60-year-old Rochester business changed its name, representing a milestone in the company’s history as it crossed the $1 billion sales mark for the first time. Last summer, former Chairman Robert Gross retired from the board, and Ponton was hired to replace former CEO John Van Heel, who stepped away from the position when his contract expired in October 2017.
The company also has continued its long-successful acquisition strategy. Monro this year has purchase 12 retail and commercial Free Service Tire Co. locations, as well as four wholesale centers; eight retail locations in Missouri from Sawyer Tire Co.; and seven additional stores the company has not yet disclosed information on.
Monro in September launched new corporate and retail websites as part of its new Monro.Forward strategy to “improve the overall customer experience and build a robust omni-channel presence.”
The company has more than 1,180 stores, 97 franchised locations, nine wholesale locations and three retread facilities providing automotive undercar repair and tire sales and services in 28 states.
Shares of company stock (Nasdaq: MNRO) were trading up in light volume Thursday morning at $65.46. In the last year, Monro stock has ranged from $45.45 to $73.45 per share.
Monro Inc., formerly Monroe Muffler Brake, last week reported record first quarter sales and earnings, but missed Wall Street expectations.
For the first quarter ended March 30, Monro reported sales of $295.8 million, up more than 6 percent from $278.5 million in the first quarter last year. Net income for the quarter rose to $20.6 million from $17.6 million a year ago. On a per-share basis, Monro reported diluted earnings of 62 cents, up from 53 cents in the year-ago quarter.
Analysts polled by Zacks Investment Research had expected earnings of 67 cents per share. Analysts expect full-year earnings of $2.41 per share. Prior to Thursday’s quarterly report, Zacks had raised shares of Monro from a “hold” rating to a “buy” rating.
Monro officials said the first-quarter sales increase was a result of sales from new stores and a comparable store sales increase of 1.9 percent, up from 1.4 percent in the first quarter last year.
Operating expenses increased by $5.1 million in the quarter, which included $1.6 million in costs related to a new Monro.Forward initiative detailed in a recent Securities and Exchange Commission proxy statement filing.
Monro.Forward centers around four key pillars, according to the SEC filing, which will be supported by a number of investments in technology and data-driven analytics across the business. Those pillars include improving customer experience, enhancing customer-centric engagement, optimizing product and service offering and accelerating productivity and team engagement.
New President and CEO Brett Ponton said upon his arrival at Monro in October he observed “significant opportunities” to build upon a solid foundation and rich history and to capitalize on the accelerating momentum in the undercar maintenance industry.
“I developed our key strategic priorities focused on delivering a consistent 5-star experience to our customers in order to drive higher traffic and increase customer lifetime value,” Ponton wrote in the proxy statement. “I also enhanced an already capable senior leadership team with seasoned leaders in both operations and marketing to assist in executing this plan.”
In its quarterly earnings report, Monro said it had acquired eight retail locations in Missouri from Sawyer Tire Co., filling an existing market. The locations are expected to add roughly $8 million in annualized sales, representing a sales mix of 50 percent service and 50 percent tires.
In addition, Monro has signed a definitive agreement to acquire another seven locations, but did not provide details on what company it has purchased. Monro officials said the locations fill in existing markets and are expected to add some $8 million in annualized sales, representing a sales mix of 60 percent service and 40 percent tires. The acquisition is expected to close in the second quarter.
“We are off to a solid start in fiscal 2019, with sustained business momentum and robust first quarter top line performance driven by our Monro.Forward strategy,” Ponton said in the earnings report. “We believe the rollout of our strategy is progressing well as we make the necessary investments in key initiatives that will enable us to develop a scalable platform to drive sustainable, long-term growth.”
Ponton said during the first quarter, Monro addressed its store staffing to support improved traffic trends.
“In the coming quarters, we plan to right size overstaffed stores, which we expect will get us back to a flat staffing model and will allow us to achieve overall greater store efficiency,” Ponton said in the company’s first-quarter earnings calls. “As part of our store staffing optimization efforts, we plan to also rebalance the level of technical skills in each store, ensuring our stores are staffed with technicians that have the appropriate skill level for the services needed.”
On Tuesday, Monro announced the appointments of Jerry Alessia as senior vice president of tire merchandising and Avi Dasgupta as vice president of information technology infrastructure and data architecture. Both hires are part of the company’s new Monro.Forward initiative.
Separately last week, Monro announced a collaboration with Amazon.com to provide tire installation services at Monro’s retail tire and automotive service centers throughout the Eastern U.S.
Monro’s tire installation services are now available to customers who purchase tires from Amazon.com and select the ship-to-store option across Monro’s 52 stores in the Greater Baltimore area. Following the initial launch, the collaboration will be expanded to provide the service at Monro’s nearly 1,200 retail locations in 27 states. The Amazon deal is non-exclusive.
“In line with our Monro.Forward strategy, this collaboration marks a major milestone of development of our omni channel presence and builds upon the success of our multiple preferred tire installer agreements,” Ponton said in Monro’s earnings call. “While still representing a small fraction of our business, our agreements with online retailers are a key component of our omni channel strategy.”
Ponton said roughly half of the online tire customers are new to the Monro brand. Historically Monro has experienced an average ticket of roughly $120 for online tire sales, compared with the company average ticket of more than $160.
“We have no reason to believe that the economics on the Amazon relationship will be dissimilar to what we’re currently experiencing with other online partners,” he said in the call.
Monro officials also increased full-year guidance. Based on current sales, business and economic trends, as well as acquisitions, Monro anticipates fiscal 2019 sales to be in the range of $1.18 billion to $1.21 billion. The company expects diluted earnings per share of $2.30 to $2.40, compared with $1.92 per share in fiscal 2018.
Monro will hold its annual meeting on Aug. 14, at which shareholders will vote to elect four directors and approve compensation for company executives. Under a 2017 employment agreement that runs through July 31, 2020, Ponton is paid a base salary of $550,000 and is eligible to earn an annual bonus of up to 150 percent of his base salary upon certain performance achievements.
The proxy statement notes that for fiscal 2018, the median income of all employees other than the CEO was $34,543, while the total compensation of the CEO was $5.9 million. John Van Heel served as CEO until Oct. 1.
Following a dip in share price to $63.25 on Friday, Monro stock (Nasdaq: MNRO) has rebounded, trading at $67.75 mid-week.
Rochester automotive undercar specialist Monro Inc. on Monday reported an increase in fourth-quarter revenue and record year-end sales, beating Street estimates. The company also announced the acquisition of 12 stores and four wholesale locations in the South.
Sales for the fourth quarter ended March 31 increased more than 13 percent to $285.6 million, compared with $252 million in the fourth quarter of fiscal 2017. Fiscal 2018 was a 53-week year with 368 selling days, compared with 361 selling days last year, company officials noted. In addition to the extra week, the fourth quarter included an increase in sales from new stores of $13.8 million.
Net income for the quarter was $17.5 million, up from $9.7 million in the same period last year. On a per-share basis, earnings were 52 cents, compared with 29 cents in the fourth quarter last year.
Analysts polled by Zacks Investment Research had expected earnings of 49 cents on revenue of $283.86 million.
Comparable store sales—or sales at stores open for at least one year—for the quarter increased 10.3 percent and 2.4 percent when adjusted for days. During the quarter, Monro opened 15 stores and closed three company-operated locations, ending the quarter with 1,150 stores and 102 franchised locations.
“We delivered solid fourth quarter results, driven by positive top line trends and strong execution across our business, as we launched a number of foundational tools designed to support our strategy,” Monro President and CEO Brett Ponton said in a news release. “We exit the quarter with solid industry tailwinds, improving operating performance, a disciplined acquisition strategy and newly implemented initiatives to drive improvement across the organization.”
Monro also announced the acquisition of 12 retail and commercial Free Service Tire Co. locations in Tennessee, filling in an existing market and expanding its footprint in the south. The company also acquired four wholesale centers as part of the transaction, located in Tennessee, Virginia and North Carolina, increasing its tire purchasing and distribution efficiencies, Monro officials said.
“We believe we have a clear path for future growth and look forward to carrying this strong momentum through fiscal year 2019 and beyond,” Ponton said. “As we enter fiscal 2019, we are excited about the significant opportunities that lie ahead of us. I am confident that our renewed focus on the customer and strong commitment to operational excellence will position us well to capitalize on favorable industry trends over the next few years and drive sustainable long-term value for our shareholders.”
Monro expects the new retail locations to add some $47 million in annualized sales, representing a sales mix of 15 percent service and 85 percent tires.
For the full year, Monro posted a net sales increase of 10.4 percent to a record $1.128 billion, compared with $1.022 billion for fiscal 2017. The company attributed the rise to an increase in sales from new stores of $96.2 million.
Adjusted for days, comparable store sales decreased 0.1 percent, compared with a 4.3 percent decline in the previous year.
Net income for the year was $63.9 million, or $1.92 per diluted share, compared with net income of $61.5 million, or $1.85 per diluted share in 2017.
Monro on Monday also announced a 2-cent increase in the company’s cash dividend for the first quarter of fiscal 2019 to 20 cents. The company has increased its cash dividend 13 times during the 13 years since a cash dividend was first issued. The first quarter dividend is payable on June 14 to shareholders of record as of June 4.
Monro operates in 27 states serving the Mid-Atlantic and New England regions and portions of the Great Lakes, Midwest and Southeast. The company was founded in 1957 and went public in 1991.
Shares of company stock (Nasdaq: MNRO) closed Friday at $56.10 and were down more than 2 percent to $53.94 in early morning trading Monday.
Shares of Monro Inc. stock dropped more than 12 percent on Tuesday as the company reported a 34 percent decline in net income for the third quarter.
For the quarter ended Dec. 23, Monro, formerly Monro Muffler Brake Inc., reported net income of $11.6 million, down from $17.6 million in the same period a year ago. On a per-share basis, earnings for the quarter were 35 cents.
Excluding one-time costs of 15 cents—related to management transition costs, litigation settlement costs and newly enacted tax legislation—earnings per share were 50 cents.
Monro reported sales for the quarter of $285.7 million, down from $288.3 million in the third quarter last year. The company attributed the sales decline to a comparable store sales decrease of 3.1 percent in the quarter.
Analysts polled by Zacks Investment Research had expected earnings of 50 cents on revenue of $292.93 million.
“On an adjusted basis, third quarter results were largely in line with our internal expectations,” Monro President and CEO Brett Ponton said in a statement. “By placing a renewed focus on the customer and introducing new training, technology and data-driven analytics in critical areas of the business, we will significantly strengthen our sales execution and drive operational efficiency.”
For the first nine months, Monro increased sales by 9.5 percent to a record $842.2 million from $769.5 million in the same period last year. Net income for the period was $46.5 million, or $1.39 per diluted share, compared with $51.9 million, or $1.56 per diluted share.
Monro also has signed an agreement to acquire seven stores to fill in existing markets. While the company did not disclose financial results of the purchase, Monro officials said the stores are expected to add roughly $7 million in annualized sales in the areas of service and tires.
Based on current sales, business and economic trends, Monro anticipates fiscal 2018 sales of $1.12 billion to $1.135 billion, a roughly 10 percent increase from fiscal 2017. Diluted earnings per share are expected to be in the range of $1.88 to $1.93.
“Thus far in our February fiscal month, we’re encouraged to see comparable store sales accelerate from January levels, driven by higher traffic,” Ponton said. “With a commitment to driving improvement, during the fourth quarter we will evaluate whether to take a portion of the expected fiscal 2019 tax savings, estimated to be between 45 cents and 50 cents in diluted earnings per share, and accelerate investments to fast track our strategic initiatives.
“This underscores our confidence in our strategy, which we believe will create sustainable long-term value for our shareholders,” he added.
Company stock (Nasdaq: MNRO) had dropped to $53.65 per share in midday trading Tuesday.
Monro Muffler Brake Inc. is ushering in a new era of leadership as well as a new name to reflect the 60-year-old company’s new direction.
At its annual meeting last week, Monro shareholders approved a proposal to change the automotive undercar repair and tire sales company to Monro Inc. The name change represents a milestone in the company’s history as it crossed the $1 billion sales mark for the first time, officials said.
The name change will apply to Monro’s corporate entity only and will not affect any of the company’s store brand names.
In July, Monro reported record first-quarter sales, beating Street estimates, and said it would acquire 20 stores, including eight from an existing Car-X franchisee. The stores fill in existing markets in Michigan, Illinois and Indiana, and are expected to add $13 million in annualized sales.
In June, Monro announced President and CEO John Van Heel would not seek to renew his contract with the company when it expires in October. Monro named Brett Ponton as the company’s next president and CEO.
Additionally, Monro chairman and former CEO Robert Gross retired from the board and the company at the conclusion last week’s shareholder meeting. Robert Mellor was elected as independent chairman.
Van Heel, who has served as CEO and a director since 2012, will continue to act as an adviser to the company through March 2018. In July, Van Heel sold nearly 47,000 shares of company stock, valued at $2.2 million; the following day he sold nearly 130,000 shares of company stock, valued at more than $6 million.
On Aug. 2 Gross sold nearly 65,000 shares, valued at more than $3 million. Both Mellor and Ponton have purchased a number of shares in the last few weeks.
Also at the annual meeting, Monro shareholders elected John Auerbach and Lindsay Hyde to its board of directors. Auerbach is the founder and chairman of Eloquii, a digitally native direct to consumer women’s fashion brand. Hyde is founder and CEO of Baroo, a provider of pet-related amenities in multifamily communities in large urban markets across the U.S.
“With John’s digital marketing and ecommerce expertise and Lindsay’s recognized expertise in service delivery, their experience and insights will be invaluable in guiding our company as we continue to execute on our long-term strategy and capitalize on the opportunities we see in the marketplace,” Mellor said in a statement.
Shares of company stock (Nasdaq: MNRO) were trading up 2 percent Monday from Friday’s close of $44.30.
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