After six straight quarters of same-store sales growth, Monro Inc. says sales at existing stores were flat during the second quarter of fiscal year 2020. Overall sales did increase 5.5% in the period, but that was all due to sales from new stores.
Sales for the quarter, which ended Sept. 28, 2019, were $324.1 million, compared to $307.1 million. Net income for the period was $20.3 million, down 6.6% from almost $21.8 million a year ago. Monro’s income-to-sales ratio for the quarter was 6.2%.
For the first half of the fiscal year, Monro has recorded almost $641.2 million in sales, up 6.3% from $602.9 million for the first half of fiscal 2019. Net income for the first six months is $42.9 million, up 1.2% compared to $42.4 million a year ago.
Brett Ponton, CEO and president of Monro, said, “We are disappointed in our second quarter results, which were significantly impacted by gross margin pressures related to higher than expected tire and labor costs.
“However, we believe the second quarter represents a low watermark for us this year, as we quickly took action to rectify our margin pressures in the near-term and are implementing initiatives to drive margin expansion moving forward. As a result of our performance this quarter we are lowering our full-year guidance ranges, but we remain confident our transformation is creating a sustainable platform for long-term value creation.”
Here’s the new outlook for Monro’s full-year performance:
“In light of comparable store sales trends during the second quarter, guidance for fiscal 2020 comparable store sales has been revised to an anticipated increase of 1% to 2%, compared to the previous guidance of an increase of 1% to 3%,” Ponton said. “The revised guidance assumes improving comparable store sales growth in the second half of the year, as initially contemplated in the full-year guidance provided on July 25, 2019.”
In the second quarter, here’s a look at how Monro performed in key categories:
Brakes Up 1%
Maintenance Up 1%
Front End/Shocks Flat
Alignments Down 1%
The company ended the quarter with 1,262 company-operated stores and 98 franchised locations, and it’s signed agreements to acquire another 27 stores in California, Nevada and Idaho.