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Technician Shortage Contributes to Monro's Performance

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Monro

"We have recruited over 700 technicians since July, but ramping up this number of new teammates presented a challenge," says Monro Interim CEO Rob Mellor.

Monro Inc. recorded another double-digit drop in sales for the final three months of 2020, and the company says it was due in large part to not having enough technicians in its stores to meet market demand.

Sales for the company’s fiscal 2021 third quarter, which ended in December, were down 13.6% from the previous year — $284.6 million compared to $329.3 million. Same-store sales were down 13% for the period. Sales from newly acquired stores helped offset the drop with $2.2 million.

Rob Mellor, board chairman and Monro’s interim CEO, called it “a tough third quarter.”

“(The) principal reason was our earlier success in downsizing our store staffing levels to align effectively our operations with the impact the COVID-10 pandemic had on our revenues. Our prompt and decisive management decisions allowed us to stay head of the curve,” noting the company’s emphasis at the start of the pandemic was to rightsize its technician staffing levels at each store to match the lower consumer demand.

“When demand picked up we had to recruit hundreds of technicians. We have recruited over 700 technicians since July, but ramping up this number of new teammates presented a challenge.

“Getting our new teammates on board, introducing them to our operating standards and getting them to full run rate in each store could not be done in a day or even a week. For each recruit takes time before they can become fully productive, and some just don’t work out.

“This was reflected in our October and November labor productivity levels and directly impacted our top line.

"Stores were not able to meet all the demand and sales opportunities were missed."

“During the third quarter we completed the onboarding task and have reversed this trend. December was the best month of the quarter with earnings only a few cents below our pre-COVID-19 December results of (2019.) Our new technicians are making significant contributions to sales, margins and earnings.”

Mellor says the improvement has continued into January. Brian D’Ambrosia, executive vice president and chief financial officer, says Monro’s January same-store sales were up 3% compared to last year’s pre-COVID-19 numbers.

The Third Quarter and What’s Ahead

For Monro’s third quarter, which ended Dec. 26, overall sales fell by $44.7 million. Here’s how the company performed in its top categories:

  • Tires: down 8%
  • Alignments: down 16%
  • Front end/shocks: down 17%
  • Maintenance services: down 19%
  • Brakes: down 21%

Monro says its tire margins did improve in the period, and that was driven by the completed rollout of a tire category management and pricing tool.

Total sales of $284.6 million were met with net income of $6.7 million — down 64% from $18.9 million a year ago.

But Mellor and other company officials see a brighter future ahead. They note December posted the best comparable store sales since the start of the pandemic, and that momentum carried into January.

The company has continued work on its Monro.Forward iniatitives to rebrand stores and convert service-only locations into tire stores. The transformation of 104 stores was completed in the quarter, ahead of the expected 80 stores the company hopes to finish each period.

“Our initiatives are working and we look forward with confidence in our business,” Mellor says.

Monro didn’t provide guidance on its financial outlook, citing “the ongoing uncertainty caused by COVID-19.”

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