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Monro receives a 'Buy (1)' rating from BB&T Capital Markets

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BB&T Capital Markets maintained its "Buy (1)" rating on Monro Muffler Brake Inc. following the latter's fiscal 2008 financial results.

According to analysts Anthony Cristello and Allen Hatzimanolis, Monro Muffler's fourth-quarter results were in line with its expectations. However, a strong start to its first-quarter 2009 fiscal year "creates optimism."

In April, comparable store sales were up 8%, versus 3% last year. BB&T's analysts estimate that for the quarter, sales are up 6% to date. A 5% price hike in April may be the driver, they say. Also, "for the first time... in over a year, it appears that traffic trends have turned positive."

The 150 service outlets that have implemented the company's Black Gold Tire Program increased both their tire unit and same store sales in fiscal 2008 versus fiscal 2007 compared to non-Black Gold stores. By the end of fiscal 2009, Monro hopes as many as 200 stores will get with the Black Gold Tire Program.

"What we like about the Monro story is that its greater exposure to nondiscretionary spending should provide stability in same store sales growth, and the company's focus on data mining along with 'loss leading' oil changes hould keep a steady flow of customers in the bays," they add.

Monro Muffler Brake posted net income of $21.9 million on net sales of $439.4 million for its 2008 fiscal year ended March 29, 2008. That compares to income of $22.3 million on sales of $417.2 million for fiscal 2007.

For the fourth quarter, Monro recorded net income of $1.9 million on sales of $107.2 million. That compares to income of $4.2 million on sales of $107.7 million for the fourth quarter of fiscal 2007.

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