Monro Sees Improvement in 'Transformative Year'
A shorter selling period and drop in tire sales may have sullied the fourth quarter of fiscal 2019 for Monro Inc., but the company still recorded a 6.4% increase in sales for the full year, and crossed the $1.2 billion threshold, up from $1.12 billion a year ago.
Acquisitions completed and announced for the year provide the company with an expected $132 million boost in annualized sales.
During the fourth quarter (January to March), Monro opened 15 and closed four company-owned stores. The company ended the fiscal year with 1,197 company-owned stores and 98 franchised locations (compared to 1,150 and 102 a year ago.) The numbers don’t include two of Monro’s most recent acquisitions, which came in two new markets, California and Louisiana.
“Fiscal 2019 was a transformative year for Monro,” said Brett Ponton, the company’s CEO and president. “We launched our Monro.Forward strategy, focusing on driving operational excellence and delivering a consistent, 5-star experience to our customers. We achieved a number of key milestones during the year, including optimizing our Good, Better, Best packages and store staffing model, broadening our online presence with our collaboration with Amazon.com, launching our new data-driven CRM marketing platform, and completing our Monro playbook and store refresh pilot.
“The progress we’ve made against our strategy is underscored by our strong financial results this year. In addition to driving improvement across our business through our strategic initiatives, we continued to capitalize on attractive acquisition opportunities, diversifying our footprint by entering Louisiana and expanding to the West Coast.”
A look at the numbers
In the fourth quarter
- Sales were up 0.6%, to $287.2 million from $285.6 million a year ago.
- Net income dropped 3.8%. It was $16.8 million, compared to $17.5 million the year prior.
- The sales included $17.7 million in sales from new stores, and $14 million in sales from recent acquisitions.
- Monro opened three greenfield stores during the quarter. (Greenfield includes stores built from the ground up, as well as acquisitions of one to four stores.)
- Same store sales dropped 5.7%, but the period was a week shorter than the fourth quarter the previous fiscal year. When adjusted for days, comparable store sales actually increased 0.5%.
- In the quarter brake sales were up 8% and alignments were up 1%. Maintenance services were flat, while tires were down 1% and front end/shocks were down 2%.
For the full fiscal year
- Monro hit a record for sales for fiscal year 2019, $1.2 billion up from $1.1 billion a year ago.
- Net income was $79.8 million, up from $63.9 million — an increase of 24.7%.
- New stores provided $71.7 million in sales, including $53.6 million from recent acquisitions.
- Monro added 21 greenfield stores during the year.
- Same store sales increased 0.4% for the year, but when adjusted to account for seven fewer selling days in the year, comparable store sales increased 2.3%, compared to a 0.1% decrease from the prior year.
- For the year, when adjusted for the shorter selling period, brake sales were up 10%, and tire sales were up 2%. Maintenance services and alignments were both flat, and front end/shocks were down about 1%.
Outlook for the year
Monro expects another year of growth for fiscal year 2020.
“Based on current visibility, business and economic trends, and recently completed acquisitions, the company anticipates fiscal 2020 sales to be in the range of $1.295 billion to $1.325 billion, an increase of 7.9% to 10.4% as compared to fiscal 2019 sales.”
The company’s guidance for the year assumes a comparable store sales increase of 2% to 4%.