Monro Store Closures Affect Earnings

The closure of 145 stores helped Monro Inc. buoy its comparable store sales in its fiscal first quarter of 2026. But the tire dealership also recorded a net loss of more than $8 million for the period ending June 28.

Monro recorded total sales of $301.0 million, up from about $293.2 million in the prior year — a 2.7% increase.

The 5.7% increase in comparable store sales was a big improvement compared to the 9.9% decrease recorded in the same period in fiscal 2025. Monro regularly breaks down sales in six key categories, and the company said five of the six of those categories were up compared to the year-ago period:

• Front end/shocks: up 26%
• Brakes: up 9%
• Batteries: up 9%
• Tires: up 4%
• Maintenance services: up 4%
• Alignments: flat

Automotive service categories account for about 54% of Monro’s sales thus far in the new fiscal year, which Monro said is consistent with the previous year.

Peter Fitzsimmons, president and CEO of Monro, noted the increase in comparable store sales marks two straight quarters with an increase “for the first time in a couple of years.

“This was driven by the progress we continue to make with our ConfiDrive digital courtesy inspection process, which resulted in sales and unit growth in our tire category and our high-margin service categories, including front-end shocks, brakes, batteries, and maintenance services.

“We maintained prudent operating cost control, as reflected in lower store direct costs in the quarter. We reduced inventory levels across the system by approximately $10 million, primarily as a result of reducing our store count.

“Our profitability on an adjusted diluted earnings per share basis was in-line with the prior year first quarter. These results serve as a solid foundation to build upon as we implement our performance improvement plan to enhance Monro’s operations, drive profitability, and increase operating income and total shareholder returns.

“Encouragingly, our preliminary fiscal July comps are up 2%, which would result in our sixth consecutive month of consistent comparable store sales growth.

 “We’ve made progress in the four key areas identified as opportunities for performance improvement. With the closure of 145 underperforming stores now completed, this enables us to focus on improving performance in our 1,115 continuing locations through increasing merchandising productivity, which includes mitigating tariff risk, driving profitable customer acquisition and activation, and improving our store location-based customer experience and selling effectiveness.”

The company noted it received $3.5 million in payments during the quarter due from American Tire Distributors Inc. (ATD) following the sale of its wholesale business to ATD. The payment marks the final amount due from that sale, which occurred in 2022. (The final payment schedule was delayed slightly due to ATD's bankruptcy filing in 2024.)

Store Closure Update

Monro says it closed the 145 stores by the end of May, and the company is now in the process of exiting the real estate in those locations. That will include the sale of 40 owned stores.

In addition to the $10 million in inventory savings, Monro says it was able to re-position existing inventory and remove its IT equipment from stores by the end of June.

The company expects the closures to generate positive cash flow and largely be completed in the next year. Thus far, Monro has recorded $14.8 million in store closing costs.

The store closures were one of four key areas of focus Monro laid out three months ago. Here’s a status report on the other three company-wide projects:

Merchandising and Mitigating Tariff Risk

In June Monro hired Katy Chang to serve as the senior vice president of merchandising. She will lead and oversee the development of the company’s merchandising strategy, plus long-term assortment planning, pricing and promotional strategies. She joined Monro after four years at ATD, where she most recently worked as senior vice president of merchandising and strategy. Before ATD, she worked at LPL Financial and Lowe’s Companies Inc.

Monro says it has had “constructive discussions” will its “largest vendors and tire distributors,” and that it discussed “a wide range of priorities” with those companies.

“Our team continues to conduct fact-based negotiations with top suppliers to mitigate as much of the actual and anticipated tariffs as possible,” the company noted.

Monro has seen some price increases in some materials that were tariff-related, but categorized their effect on the first quarter financial results as “not significant.”

Customer Acquisition and Activation

Monro has been testing targeted marketing programs to its customers “at a significant number of stores” and also used “a wide range of digital tools to reach target audience.” AT the same time, Monro said it has “selectively re-invigorated local media, such as radio and direct mail.”

The company is in the midst of more refined customer targeting work in a representative sample of “several hundred” stores in the company. Monro expects the results of this directed, systematic approach to be noticeable later in the year, “but when assessing markets where this approach has already been implemented, early results are encouraging.”

The Customer Experience

Monro said it has made progress, but still sees opportunities for its ConfiDrive initiative to be “more effective.”

Much of that improvement can come before the customer arrives at a store, Monro said, including how it communicates with customers when they schedule appointments. The company has created a task force to pilot improvements and implement hands-on training and coaching.