Monro’s Comps Grew 2.4%, Driven By Higher Average Ticket And Tires

Rochester, NY-based Monro Inc. saw its sales increase by $33.57 million, or 13.3 percent, to $285.58 million for the fiscal fourth quarter ended March 31, 2018 due, in part, to $13.80 million in sales from new stores (including sales from recent acquisitions of $8.70 million), as well as an extra week of sales compared to the previous year.

Comparable-store sales rose 10.3 percent (up 2.4 percent when adjusted for days). Monro’s fourth-quarter adjusted comp-store sales performance breaks down as …
• Tires: up 5 percent;
• Brakes: up 2 percent;
• Front end/shocks: up 2 percent;
• Maintenance services: down 2 percent; and
• Alignments: down 2 percent.

Gross profit rose 15.6 percent to $107.76 million, while gross margin increased 70 basis points to 37.7 percent, attributable to leverage from higher comparable-store sales. Monro’s net income grew 81 percent to $17.48 million.

During the fourth quarter of fiscal 2018, the company opened 15 shops and closed three company-operated locations, ending the quarter with 1,150 company-operated shops and 102 franchised locations. During the quarter, Monro also completed its previously announced acquisition of seven shops in Ohio, Kentucky, West Virginia and Virginia from Appalachian Tire Products Inc.

Looking ahead, management expects Monro to post a fiscal 2019 comparable-store sales increase between 1 percent and 3 percent. Full-year sales are forecast to come in between $1.17 billion and $1.20 billion, representing growth of 3.7 percent to 6.4 percent year-over-year.

So far in the current quarter, comparable-store sales decreased 1.7 percent in April (attributable to the late arrival of spring) but increased 3 percent through mid-May.

Analysts with Jefferies LLC expect stronger May trends will continue into June and are modeling a quarterly same-store sales increase of 1.5 percent for Monro. Bret Jordan and Mark Jordan also pointed out in their May 21 Company Note that, for Monro, April’s same-store sales were up against a 3.0-percent increase in the prior year, while May and June are up against lower bars of +1.1 percent and +0.2 percent, respectively.