Monro records record results
Monro Muffler Brake Inc. posted record financial results for the second quarter and six months ended September 24, 2005.
The company announced second-quarter net income of $7.6 million on sales of $95.6 million. Both are company highs. For the same period in 2004, Monro recored net income of $6.5 million on sales of $88.4 million.
The company credits the 8.2% increase in sales to a .9% comparable store sales increase and a $7.9 million contribution from new stores.
Comparable store sales were driven by a 12% increase in comparable store tire sales and a 6% growth in the comparable store maintenance service category. These gains were partially offset by softer comparable store sales in higher ticket services such as brakes and exhaust.
Gross profit in the second quarter increased 7.8% to $39.7 million versus $36.9 million last year. Gross margin remained relatively stable at 41.6% compared to 41.7% in the year ago period despite vendor price increases on oil and tires and a shift in sales mix to lower margin service and tire categories.
The company's ability to sustain recently implemented price increases helped to offset these pressures on gross margin.
For the six-month period, net income increased 14.8% to $15.4 million, while net sales increased 8.2% to $190.3 million versus the same period last year.
"Continued strong results from our tire and maintenance service categories allowed us to deliver another record quarter," says Robert Gross, CEO and president. "Importantly, we maintained our gross margin despite an increase of these lower margin categories in our overall sales mix.
"Both tires and maintenance services have been consistently important contributors to our business. We are particularly pleased with our progress in the tire category where our expertise and ability to serve our customers have been greatly enhanced by the learning gained from our most recent acquisitions, and we continue to seek similar acquisition candidates to expand and further improve our existing business."
Based on its year to date results and current trends, Monro anticipates comparable store sales growth for the full fiscal year to be in the range of 2% to 3%. The company originally forecast 3% to 5% growth.
"Declining consumer confidence and higher energy prices have caused customers to defer certain major maintenance purchases, and this was particularly apparent in the month of September," says Gross. "However, based on the past two weeks' sales and our past experience, we are confident that these sales have been only deferred and not lost.
"As such, we expect to see the benefit in the future either when consumer confidence improves or these purchases can no longer be delayed. We believe our dedicated customer service, efficient operating model, and proven growth strategy will allow us to continue to gain market share and outperform our industry regardless of external market conditions."
Monro Muffler Brake operates stores under the following brand names: Monro Muffler Brake and Service, Speedy Auto Service by
Monro, Mr. Tire and Tread Quarters Discount Tires. It operates 624 stores and has 16 dealer locations in New York, Pennsylvania, Ohio, Connecticut, Massachusetts, West Virginia, Virginia, Maryland, Vermont, New Hampshire, New Jersey, North Carolina, South Carolina, Indiana, Rhode Island, Delaware, Maine and Michigan.
(The company opened three new stores during the quarter and closed three stores, ending the quarter with 625 stores.)
Monro Muffler Brake's stock was selling for $27.30 a share at the close of NASDAQ on Tuesday, Oct. 18. That compares to a 52-week high and low of $31.77 and $22.75, respectively.