Monro Acquires More Stores and Improves Sales
Net sales, comparable store sales and net income were all up at Monro Inc. during the company's first quarter of fiscal year 2019.
Monro recorded net sales of $295.8 million in the period, which ended March 30. That's an increase of 6.2% from the same period last year, when the company netted sales $278.5 million. New and recently-acquired stores continue to help the company increase sales, as new stores contributed $14.4 million, of which recent acquisitions added $9.7 million.
Sales at existing stores increased 1.9%, up from the 1.4% increase a year ago. At the comparable stores, brake work increased 7%, tires and front end/shocks each increased 2%, while maintenance services and alignments both fell 1%.
Net income for the quarter was $20.6 million, up 17.4% from the $17.6 million in fiscal 2018. Monro notes its net income was helped by a lower tax rate of 22.7%, compared to 27.2% last year.
Operating income for the first quarter was $33.1 million, or 11.2% of sales, compared to $33.7 million and 12.1% of sales in the prior year period.
Monro also has completed another acquisition. The company has bought the eight retail locations of Sawyer Tire Co. in Missouri. Monro says the stores, all in southwest Missouri, help fill in existing markets. The stores are expected to add approximately $8 million in annualized sales, with a mix of 60% service and 40% tires. The deal is expected to close in the second quarter. On the Sawyer Tire website a logo indicates the stores are being rebranded under the Car-X brand.
Monro has also signed another definitive acquisition agreement, though it didn't reveal the name of the other party it is purchasing. But the company says it is acquiring another seven locations that fill in existing markets and will add another $8 million in annualized sales. These stores too report a mix of 60% service and 40% tires.
So far, of the acquisitions completed and announced in fiscal 2019, the stores combine to offer $63 million in annualized sales.
During the first quarter of fiscal 2019, Monro says it opened 19 company-operated locations and closed five, and ended the quarter with 1,164 company-operated stores and 98 franchised locations.
From the CEO
Brett Ponton, CEO and president of Monro, offered this analysis:
“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. We are pleased to see this momentum continue into July as comparable store sales are up approximately 2% month-to-date. 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.
"During the first quarter, we addressed our store staffing to support improved traffic trends, reached a critical milestone in the development of our omnichannel presence with our collaboration with Amazon.com, and continued to capitalize on favorable accretive acquisition opportunities.
“Looking ahead, our expectations for fiscal 2019 remain strong, as we continue to focus on driving operational excellence and delivering a consistent 5-star experience to our customers. We firmly believe the changes we are making across our business, coupled with favorable industry tailwinds, will allow us to drive sustainable growth and long-term shareholder value.”
The company has revised its guidance for the fiscal year, and says it expects sales to be in the range of $1.18 billion to $1.21 billion, up from earlier expectations of $1.17 billion to $1.2 billion. Those higher targets represent an overall increase in sales of 4.6% to 7.3%. Monro says it continues to assume same store sales will increase from 1% to 3% for the 52-week period.