Monro's Goal: Be the #1 Tire Destination at Any Price Point
For the past 18 months same-store sales have grown at Monro Inc., the nation’s third-largest independent tire dealer. And the results so far in July indicate the company could be on track to extend the streak for another quarter.
“We entered fiscal 2020 with continued momentum as we achieved our sixth consecutive quarter of comparable store sales growth, and are pleased to report this performance has extended through July with comparable store sales up approximately 1% month-to-date,” said Brett Ponton, Monro’s CEO and president.
Monro recorded nearly $317.1 million in sales for the first quarter of fiscal 2020, which ended June 29, 2019; that’s up 7.2% from $295.8 million from the year prior. Net income was $22.6 million, up 9.5% from $20.6 million for fiscal 2019.
For the current quarter, that gives Monro an income-to-sales ratio of 7.1%.
The overall sales increase for the period, of $21.3 million, was driven by a comparable store sales increase of 0.8%. New stores contributed $19.6 million, including sales from recent acquisitions of $16.6 million.
Here’s how those same-store sales break down by category:
Brakes: up approximately 6%
Alignments: up 2%
Tires: up 1%
Front end/shocks: down 1%
Maintenance services: down 2%
During the first quarter, Monro added 55 company-owned stores and closed one, and ended the quarter with 1,251 company-operated stores and 98 franchised locations.
After completing two previously-announced acquisitions that move Monro into two new states — California and Louisiana — the company announced it has completed another deal to buy two more stores in California, adding approximately $3 million in annualized sales.
In addition, the company has signed definitive agreements to acquire another eight stores in Louisiana. Those stores will add $12 million in annualized sales, and have a 50-50 sales mix of service and tires. These upcoming Louisiana acquisitions are expected to close in the second quarter.
Combined, Monro says the acquisitions it has completed and announced so far in fiscal 2020 represent an expected $75 million in annualized sales.
Investing in the image
Monro announced in May it plans to consolidate its retail brands, and eventually will move from nine nameplates to five “regional power brands” for its stores. It has started with a test of a few stores in a mid-Atlantic market, and Ponton says the company will expand the test to three markets in the Midwest. He wasn’t more specific, but said Monro will “prioritize markets where reimaging and rebranding will provide the biggest lift.” He said the company is prioritizing markets where it sees the best opportunity.
The company has also invested in the creation of a company-wide playbook so Monro stores offer a consistent consumer experience. Ponton says the efforts are paying off.
“Our solid performance despite cold and wet spring weather in certain regions reflects improved in-store execution across our business as well as the continued traction of our Monro.Forward initiatives, which are progressing on schedule. We are particularly encouraged by the outperformance of our re-imaged stores where we delivered notable improvements in comparable store sales and guest satisfaction ratings during the quarter.”
Ponton says it’s too soon to provide to store performance comparisons of locations that have been re-imaged and those that haven’t. He says “we’re in the low 40s” of number of stores that have been reimaged, and that’s a small sample size. But he says, “we’re very pleased. They did significantly outpace the average.” And he says that performance is so far carrying over into July.
Monro updated both its corporate and retail-facing websites in late 2018, and at the time said it planned to launch e-commerce sales in the first quarter of fiscal 2020. Ponton has pointed to a later date for that launch — sometime in the second half of fiscal 2020. That update will include the option for consumers to look at tires and buy them online.
Ponton said it’s part of the company’s goal to be “the number one destination for tires at any price point.” Monro’s private label tires account for 40% of its tire units.
Already, the web updates are helping the business. He said website sessions doubled year over year, and clicks to call, driving directions and appointment requests have all increased. Monro is also investing in a new telephone system.