Monro Muffler Brake Inc.'s sales increased 19.3 percent in the second quarter, helped in part by growing comparable store sales plus the acquisition earlier this year of Mr. Tire outlets.
Sales grew to $88.4 million from $74.1 million in last year's period. This increase was spurred by about $14.2 million from new stores, including about $13 million from Mr. Tire, along with a 0.6-percent improvement in comparable store sales, Monro reported.
Monro said the recently announced acquisition of five Donald B. Rice Tire Co. retail stores, which should be closed soon, will bolster earnings within 12 months.
Net income grew 13.1 percent in the quarter to a record $6.67 million, up from $5.9 million the previous year. For the third quarter, the company estimated comparable store sales growth would be between 3-5 percent vs. 4 percent last year.
Robert Gross, Monro's president and CEO, said sales were helped by an oil change promotion aimed at attracting new customers.
A direct mail campaign advertised $15.99 oil changes, which drove a 15-percent increase in comparable store oil changes.
Comparable store sales also benefited from an extra selling day, a 9-percent increase in scheduled maintenance services and strong comparable tire sales and store traffic.
Gross profit was 42 percent of sales, down slightly from 42.4 percent of sales last fiscal year. Monro said the change is the result of increased sales in the lower-margin tire category with the addition of Mr. Tire.
Monro also opened three new stores and closed one during the quarter.
For the first half, Monro's sales increased 19 percent to a record $175.8 million from $147.8 million last year. Net income for the half grew 15.5 percent to a record $13.6 million, up from $11.8 million a year ago.
``Although we experienced challenging economic conditions and reduced consumer spending during the second quarter, we were able to again deliver record sales and earnings,'' Mr. Gross said in a statement. ``Increased tire sales mix, combined with Mr. Tire integration costs and higher than anticipated (accounting) expenses, lowered our overall operating margins.
``Despite this margin pressure, diluted (earnings per share) increased 15 percent for the quarter over the same period last year.''
For the full year, Monro expects per share earnings of $1.36 to $1.40, compared with $1.18 last year.
Monro operates 603 stores and seven kiosks plus 16 dealer locations in 18 states under the brand names Monro Muffler Brake and Service, Speedy Auto Service by Monro, Mr. Tire and Tread Quarters Discount Tires.