Monro Expects to Experience Sales Decrease
Monro Inc. estimates it will experience a sales decrease for the fourth quarter of its fiscal year, ended March 28, “largely driven by a substantial decrease in traffic since mid-March” due, in part, to the COVID-19 crisis.
The company’s preliminary estimate of sales for the fourth quarter of the fiscal year ended March 28, 2020 is approximately $286.1 million, a decrease of .4% compared to $287.2 million in the prior year quarter.
Store sales declined by approximately 9.5%, “offset by sales from new stores,” according to Monro officials.
“Mild weather in the company’s northern markets during January and February also negatively impacted comparable store sales during the quarter.
“Monro exited the fourth quarter of fiscal 2020 with a comparable store sales decrease of approximately 45% during the last week of the quarter and expects the slowdown in traffic to continue to negatively impact its top line performance in the first quarter of fiscal 2021, as authorities have announced expanded measures to prevent the further spread of COVID-19.
“Due to the decline in sales for the fourth quarter of fiscal 2020, the company now expects fiscal 2020 diluted earnings per share to be well below the low end of its previously issued guidance range of $2.25 to $2.35, which did not include the impact of COVID-19.”
Monro President and CEO Brett Ponton, President and Chief Executive Officer says that “first and foremost, Monro is focused on the safety and well-being of our teammates, customers and the communities that we serve during this critical period.
“As our stores remain open to provide essential services during the COVID-19 pandemic, we are focused on the areas of our business within our control, including aligning labor with demand, reinforcing disciplined cost management protocols and leveraging our diversified supply chain.
“While COVID-19 significantly impacted our fourth quarter financial results, and continues to impact our store operations, we believe our ample liquidity and solid balance sheet position us well to navigate this challenging environment,” he notes.
Monro is closely monitoring the guidelines of local, state and federal officials. Its stores continue to operate on reduced hours, even in those areas that have issued “shelter-in-place” orders.
The company also “has implemented and continues to adjust comprehensive business contingency plans in response to COVID-19 to ensure that its stores are operating efficiently while focusing on the health and safety of its teammates and customers.”
Monro officials believe that the firm’s “solid balance sheet and strong liquidity position provide ample financial flexibility to support its business operations in the current environment.
The company also has precautionary steps to further mitigate near-term headwinds and strengthen its cash position, including:
- drawing down the remaining $350 million from its revolving credit facility;
- deferring non-critical capital expenditures including store reimage;
- reducing store hours and store labor to match demand;
- reducing selling, general and administrative expenses, and;
- bolstering its working capital position.
“As we navigate this unprecedented period of uncertainty, we are closely monitoring the evolving situation and the ongoing impact of COVID-19,” says Ponton. “I would like to thank the entire Monro organization for their extraordinary efforts during this challenging time.”
Monro will provide a more detailed update on the impact of COVID-19 on its business operations during its fourth quarter fiscal 2020 conference call.