Tire Sales Were Down at Monro in Fiscal 2018
New stores provided Monro Inc. with $96.2 million in sales during fiscal year 2018, and they helped the company record a 10% increase in sales for the period that ended March 31, 2018.
Those new stores helped Monro exceed the $1 billion mark in sales for the second consecutive year. The company, which in 2017 was the third largest independent tire dealer in the country, recorded $1.1 billion in sales, up from $1.0 billion the year prior. Monro reported net income of $63.9 million for the year, up from $61.5 million in 2017.
The balance sheet was also helped by an extra week in the fiscal year. There were 368 selling days in the period, compared to 361 days a year earlier.
With those extra selling days, comparable store sales increased 1.8%. When adjusted for those extra days, comparable store sales actually dropped 0.1%. But that too is an improvement over the year prior, when same-store sales fell 4.3%.
Adjusted for days, here's how the comparable stores did in key categories for the year:
Brakes: Up 3%
Front end/shocks: Up 2%
Tires: Down 1%
Maintenance services: Down 2%
Alignments: Down 2%
Total operating expenses for the year were $308.3 million, or 27.3% of sales, up from $280.5 million in 2017, or 27.5% of sales.
The fourth quarter
Sales in the final period were up, $285.6 million compared to $252.0 million. Net income also increased, to about $17.5 million, compared to $9.7 million the previous year.
With that extra week in the fourth quarter, same-store sales were up 10.3%. When sales are adjusted to reflect those extra days, Monro says same-store sales increased 2.4%. When adjusted for days, comparable stores recorded a 5% increase in tire sales in 2018, and a 2% increase in brakes and front end/shocks. Maintenance services and alignments dropped 2% for the year.
Monro completed two agreements during the final period of the fiscal year. In March the company acquired seven stores from Appalachian Tire Products Inc., and on May 13 Monro acquired the assets of 99-year-old tire dealership Free Service Tire Co. The Free Service deal includes 12 retail and commercial stores, four wholesale distribution centers and a retread facility.
From CEO and President Brett Ponton:
“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. 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. We believe we have a clear path for future growth and look forward to carrying this strong momentum through fiscal year 2019 and beyond.
“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 operates 619 tire stores (and 1,166 company-owned stores overall, plus 98 franchised locations, as of May 21, 2018.) The company also has nine wholesale centers and three retread facilities. The company's tire stores on average do $1.2 million in sales, with a mix of 60% tires and 40% service.