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Monro has many more tricks up its sleeve

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It seems Monro Muffler Brake Inc. is placing a heavy foot on its acquisition accelerator.  After announcing agreements on July 23 with two dealers to add 31 stores in New York, Pennsylvania and Massachusetts, the company slipped in a whopper of a statement that shows what is to come.

Monro says it has more than 10 non-disclosure agreements in the hopper, which industry analyst and Modern Tire Dealer columnist Nick Mitchell notes “is the highest number in history.”

John Van Heel, CEO and president of Monro, says the company’s next potential acquisitions “are all within our markets.” They include store chains of five to 40 locations. Van Heel notes the prospective deals are “all very consistent” with what Monro has acquired and said in the past about its growth strategy. (Read: Gross says Monro could triple in size.)

Monro aims to own multiple stores in every market it serves. It refers to its two-brand strategy, where the company operates multiple stores under different brand names in the same market. Read about Monro’s first quarter 2016 performance here.

Van Heel didn’t give many hints of who the company's working with, or where the next acquisitions are taking place, but did say “a fair number are in the newer markets,” such as Florida and Georgia.

“It’s a good chunk of the opportunity that we have, which again for us is very encouraging given the density and opportunity in those markets,” Van Heel says. “And the fact it will help balance our geography some, I’m very encouraged by the opportunities in those new markets.”

Adding stores in the southeast region of the U.S. eventually will allow the company to add a distribution center there. The company acknowledges it’s not moving inventory in the most cost-effective manner, but as Executive Chairman Robert Gross says, “it’s not hurting us too bad right now.”

Van Heel says a distribution center will come, eventually.

“I view us making the investment in a new DC when we hit triple digit stores down in that area of the country. When we talk about the synergies that we got, we’re obviously not getting all of the distribution synergies,” Van Heel says. “You can see the importance of that for the 31 stores we just announced. Those will be break even this year after basically six months of operations, which is ahead of what we usually experience, because they are so close within our market.”

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