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Monro Muffler Brake posts $7.8 million in earnings on record 1Q sales

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Monro Muffler Brake Inc. recorded net income of $7.8 million on record sales of $120.4 million for its fiscal 2009 first quarter ended June 28, 2008. That compares to income of $8.2 million on sales of $107.6 million for the same period last year.

The company's income-to-sales ratio was 6.4%.

According to the company, the 11.8% increase in sales were positively impacted by:

* strong in-store execution,

* a 2.5% comparable store traffic increase driven by effective advertising programs,

* additional price increases in certain product categories, and

* a $7.4 million increase in sales from new stores.

Comparable store sales increased 5.6%, on top of an increase of 6.2% for the first quarter of fiscal 2008, and exceeded Monro's previously estimated range of 3% to 5%. Comparable store sales for the first quarter of fiscal 2009 included a comparable store sales increase of 9% for tires.

"We are very encouraged by our continued strong performance and the positive momentum that our business has sustained over the past five months," says Chairman and CEO Robert Gross.

Based on year-to-date performance and current business trends, the company says it anticipates comparable store sales growth in the range of 3% to 5% for the second quarter of fiscal 2009. For fiscal 2009, Monro estimates it will have comparable store sales growth of 3% to 4%.

"We are very pleased to see that our positive trends have extended into our current quarter, with our July monthly comparable store sales increasing approximately 8% as of last weekend (July 19-20)," says Gross. "While we are cognizant of the challenging macro environment, we are cautiously optimistic about our outlook for the remainder of the year, and expect that our company-operated stores and low cost business model will allow us to continue to produce solid results.

"Moreover, we believe that our strong foundation will afford us the stability and flexibility to capitalize on fairly-priced acquisitions, which we anticipate may arise in this difficult environment."

Based on the company's recent acceleration in same store sales trends and improved profitability at Monro's ProCare stores, BB&T Capital Markets is reiterating its "Buy (1) rating.

"We believe that Monro is well positioned to deliver solid earnings growth in FY'09, and see upside potential to what is conservative guidance, in our opinion," says BB&T.

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