Monro rides Mr. Tire acquisition to record sales and earnings
Monro Muffler Brake Inc. reported net income of $6.67 million on sales of $88.4 million for the second quarter ended Sept. 25, 2004. That compares to net income of $5.89 million on sales of $74.1 million for the same period a year ago.
According to Monro, the 19.3% increase in sales was driven, in part, by a .6% improvement in comparable store sales. New stores accounted for $14.2 million in sales; Mr. Tire stores represented $13 million of that total. (Monro completed its acquisition of 36 Mr. Tire Inc. locations from Mile One Automotive in March.)
Gross profit was 42% of sales compared to 42.4% of sales during the second quarter of 2003. Monro attributes the decrease to "increased sales in the lower-margin tire category."
"Although we experienced challenging economic conditions and reduced consumer spending during the second quarter, we were able to again deliver record sales and earnings," says Robert Gross, Monro´s CEO and president.
Earlier this month, Monro acquired five Rice Service & Tire Centers from Frederick, Md.-based Donald B. Rice Tire Co. They are scheduled to re-open tomorrow as Mr. Tire stores.
"Store expansion remains a significant part of our growth and profitability objectives, and the recent weak marketplace provides the opportunity to acquire businessess at advantageous prices," says Gross. "We continue to evaluate attractively priced targets which would further expand our market share and be accretive to earnings in a timely manner."
Sales and net income for the first six months of Monro´s fiscal year were also records. Sales totaled $175.8 million, a 19% increase vs. the same period in 2003. Net income increased 15.5% to $13.6 million.
Looking ahead, Monro estimates comparable store sales growth for the third quarter will be between 3% and 5% (compared to 4% last year).
Monro operates 603 stores in the United States under the names Monro Muffler Brake and Service, Speedy Auto Service by Monro, Mr. Tire and Tread Quarters Discount Tires. The Rochester, N.Y.-based company owns 84 tire outlets, the eighth largest independent tire store chain in North America, according to Modern Tire Dealer.