Monro Inc.’s comparable store sales increased slightly in the most recent period, up 1.3%, and company leaders said they continue to see improvements as Monro focuses on the staffing levels and training of teammates in its smallest and lowest-performing stores.
In those 300 small and low-performing locations, comparable store sales increased about 10% in the company’s second fiscal quarter, which ended Sept. 24.
Company-wide, comparable store sales increased about 6% in the tire category. Maintenance services grew by 1%, while brakes and the front end/shocks category were both off 5%. Alignments were down 8% in comparable store figures.
The overall sales picture looks down, but that’s in large part because Monro earlier this year sold off its wholesale distribution business to American Tire Distributors Inc. A year ago that wholesale operation contributed $28.8 million in sales for this quarter.
Overall, Monro recorded sales of $329.8 million for the period, down from $347.7 million a year ago. Net income for the second quarter was $13.1 million, down from $21 million in the same period of the prior year.
For the first six months of the 2023 fiscal year, Monro has recorded sales of $679.4 million, down 1.5% from the $689.5 million in fiscal 2022.
Mike Broderick, Monro’s president and CEO, noted that consumer behavior is adapting to inflationary pressures. Customers are opting for lower-tier tires, and have been deferring automotive service. With those trends in place, he said Monro intentionally has not passed through all price increases to its customers. That resulted in a higher amount of material costs as a percentage of sales in the quarter compared to last year.
At the same time, Broderick says Monro’s new tire distribution partnership with ATD is providing a broader mix of tire options in more stores. He said stores historically may have only had a better-best lineup, and now offer good-better-best choices for customers.
“While our topline results do not fully reflect the good work of all of our teammates, we continued to make progress on our overall strategy in the second quarter. Led by approximately 10% growth in our small or underperforming stores, comparable store sales increased approximately 1%, with momentum building as the quarter progressed.
“Given the challenges of the current macro environment, we saw stretched consumers trade down to lower priced tire options and defer vehicle maintenance in some of our key service categories. Our partnership with American Tire Distributors allowed us to reposition our tire assortment to give our customers the right tire at the right price. In an effort to build a longer-term relationship with our customers, we made an intentional decision to not fully offset parts inflation through additional increases in price.
“We also maintained the critical investments we’ve made in our labor force in order to preserve our long-term service model. Although our investments in price and labor impacted our gross margin, we gained market share in our tire category in the second quarter. Supported by strong performance in our tire category as well as improving trends in our service categories, we are seeing positive signs that the consumer deferral cycle might be coming to an end.
“The strengthening sequential demand that we saw in the second quarter has continued into fiscal October, with our preliminary comparable store sales up 3.7%.
“We remain confident that as long as our stores are properly staffed, our pricing is competitive with the right assortment and we continue to improve our in-store execution, we will be able to drive traffic to our stores to serve the needs of our customers and capture market share gains. While we still have significant opportunities and important work to do to achieve the kind of operational excellence that will allow us to consistently deliver on our mid-single digit comp store sales expectations, we believe our business is well positioned with the right strategy in place to take advantage of longer-term industry tailwinds.”
