Monro Records Drops in Both Net Sales and Income
Net sales dropped 0.9% and net income fell 34% at Monro Inc. for the three-month period ending Dec. 23, 2017. Lower same-store sales were to blame for the decreases.
The period, which is the third quarter of Monro’s 2018 fiscal year, included sales of $285.7 million, down from $288.3 million a year ago. Net income was $11.6 million, down from $17.6 million in fiscal year 2017.
The company’s income -to-sales ratio for the quarter was 4%.
Tire sales at Monro Inc. were down 4% for the three-month period. Alignments were down 5%, while maintenance services like oil changes fell 3% and brakes were down 1%. Front end and shocks were flat for the quarter.
Monro says the decreases at comparable stores were partialy offset by sales of $6.4 million from new stores.
During the quarter, Monro opened four and closed two company-operated stores. The company ended the period with 1,138 company-operated stores and 103 franchised locations.
Monro also says it has signed a definitive agreement to acquire seven stores, and that they’re expected to add about $7 million in annualized sales. The newest acquisitions hold a sales mix of 45% service and 55% tires. The company didn't idenitify the stores it was buying.
The deal is expected to close during the fourth quarter.
Brett Ponton, CEO and president of Monro, offered this analysis:
“On an adjusted basis, third quarter results were largely in line with our internal expectations. During the quarter, we reached a favorable settlement in a long-standing legal matter, continued to execute our disciplined acquisition strategy and moved quickly to launch a number of strategic initiatives to drive improvement across our organization. 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.
“As we enter the fourth quarter, we saw top-line recovery in our January fiscal month which ended on the 20th, with comparable store sales up approximately 1%, or 2.5% after adjusting for the holiday calendar shift. Thus far in our February fiscal month, we’re encouraged to see comparable store sales accelerate from January levels, driven by higher traffic. 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 and $.50 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.”
Overview of the first nine months
Sales increased 9.4% to a record $842.2 million, up from $769.5 million for the prior year. Net income for the first nine months is $46.5 million, down 10.4% from $51.9 at this point in fiscal year 2017.
Same-store sales are down 0.7% for the first nine months of the period, ended December 2017.
Based on current sales, business and economic trends, and recently announced and completed acquisitions, Monro anticipates fiscal 2018 sales to be in the range of $1.120 billion to $1.135 billion, an increase of 10% to 11% as compared to fiscal 2017 sales.
That guidance assumes a comparable store sales decrease of 0.5% to an increase of 0.5% on a 52-week basis (an increase of 1.5% to 2.5% including an extra week in the fourth quarter).
Those figures represent a slight improvement over previous guidance, which included sales of $1.115 billion to $1.145 billion, and a comparable store sales decrease of 1.0% to an increase of 1.0%.