Monro Reports 0.9% Decline In Comp-Store Sales

For the fiscal third quarter ended Dec. 28, 2019, Monro Inc. reported $329.28 million in sales — an increase of 6.2% compared to the previous year. Management attributed the $19.17-million total sales increase to $22.70 million in sales from new stores, including $20.70 million in sales from recent acquisitions, which was partially offset by a 0.9% decrease in comparable-store sales as higher year-over-year ticket was offset by negative traffic.

“In October and the beginning of November, we performed well against difficult comparisons in the prior year,” President and CEO Brett Ponton told analysts on the company’s Jan. 30 earnings conference call. “Mild weather conditions toward the end of November and in December caused a slowdown across our core northern markets. These conditions have continued into January, with our comparable-store sales down 4% during the month.”

By month, comps were down 1.2% in October, down 1.7% in November and up 0.4% in December.

Comp-store sales declined roughly 3% for brakes and alignments, decreased approximately 1% for tires and front end/shocks. Maintenance services comps were flat.

The company’s gross profit increased 5.4% to $124.35 million; however, Monro’s gross margin decreased 20 basis points to 37.8%, primarily because of lower comp-store sales which resulted in higher fixed distribution and occupancy costs as a percentage of sales. This was partially offset by lower material costs as a percentage of sales.

Monro’s net income declined 8.0% to $18.88 million.

During the third quarter ended Dec. 28, 2019, Monro added 27 company-operated shops, ending the period with 1,289 company-operated shops and 99 franchised locations.

OUTLOOK … Based on current sales, business and economic trends, as well as recently completed acquisitions, management now anticipates that Monro’s fiscal 2020 sales will come in between $1.275 billion and $1.290 billion — an increase of 6.2% to 7.5% when compared to fiscal 2019 sales. This is down from previous guidance calling for $1.295 billion to $1.315 billion in sales.

Additionally, management’s comp-store sales guidance for fiscal 2020 has been revised to -1% to flat — down from the prior guidance of +1% to +2%.    — Marc Vincent