Acquisitions Boost Monro's 3Q Results
New store sales accounted for 6.4% of Monro Inc.'s net sales in its third quarter ended Dec. 29, 2018. That boost helped the company register an 8.5% increase in total sales versus the same period last year.
(Monro's fiscal year runs from April 1 to March 31.)
Monro recorded net income of $20.5 million on net sales of $310.1 million for 3Q 2019. That compares to income of $11.6 million on sales of $285.7 million in fiscal 2018.
The company's income-to-sales ratio was 6.6%.
Monro also recorded a 4.8% increase in operating income, which rose from $29.3 million to 30.7 million.
"We delivered our fourth consecutive quarter of positive comparable store sales growth and achieved a third quarter record earnings per share, reflecting sustained demand in our tire and brake categories and solid execution across our business," said Brett Ponton, CEO and president. "Our Monro.Forward initiatives continue to gain traction, and I am pleased to report that we successfully implemented our standardized in-store operating procedures and store refresh program at our 31 pilot locations in Rochester, N.Y. We are encouraged by the outperformance of these stores and look forward to expanding this initiative across our store base.
"Additionally, we continue to capitalize on accretive acquisitions and plan to enter a new state in the fourth quarter with a 12-store acquisition in Louisiana, further expanding and diversifying our geographical footprint.” The company said these locations are expected to add approximately $15 million in annualized sales, representing a sales mix of 35% service and 65% tires. The acquisition is expected to close in the fourth quarter of fiscal 2019.
Although sales in October and November were strong because of early winter weather conditions, mild weather in December and early January negatively impacted the Monro's top-line performance, he said.
"We are encouraged by a recovery in late January that has lifted fourth quarter to date comparable store sales up approximately 2% on a reported basis. We remain confident in our ability to achieve the upper-end of our full year comparable store sales guidance range.
"Looking ahead, we intend to maintain our steadfast commitment to driving operational excellence and delivering a consistent five-star experience to our customers, while executing our disciplined acquisition strategy to achieve a scalable platform for sustainable, long-term value for our shareholders."
During the third quarter of fiscal 2019, the company opened nine company-operated locations and closed one, ending the quarter with 1,186 company-operated stores, 99 franchised locations, eight wholesale locations and three retread facilities. More than 621 of the company-operated stores are independent tire dealerships, which makes Monro the third largest tire dealer on the Modern Tire Dealer 100 list.
For the nine-month period ended Dec. 29, 2018, Monro posted net income of $63 million on net sales of $913 million. That compares to income of more than $46.4 million on sales of $842.2 million.
Based on current sales, business and economic trends, and recently announced and completed acquisitions, the company said it continues to expect fiscal 2019 sales to be in the range of $1.185 billion to $1.215 billion, an increase of 5.1% to 7.7% as compared to fiscal 2018 sales. Fiscal 2019 sales guidance continues to assume a comparable store sales increase of 1% to 3% on a 52-week basis.