ROCHESTER, N.Y. (May 21, 2013) — Monro Muffler Brake Inc. suffered double-digit drops in operating and net income for the quarter and year ended March 30 despite sales gains in both periods.
Monro attributed its lower earnings in part on a shift in sales to lower-margin tires—primarily related to newly acquired stores—and a loss of leverage from weaker year-to-year comparable store sales.
Monro President and CEO John Van Heel said the fourth quarter performance reflected the "continued impact of the challenging economic environment that has been weighing on our customers. Given the environment, our customers continued to defer purchases and trade down from higher-cost automotive maintenance and repair purchases."
Net income in the quarter fell 22.6 percent to $8.1 million, while sales increased 14.1 percent to $195.9 million. Operating income for the quarter decreased 11.4 percent to $15.5 million.
Net income for fiscal 2013 fell 22.1 percent to $42.6 million, while sales increased 6.6 percent to $732 million. Operating income fell 19.4 percent to $73.7 million.
Mr. Van Heel also said the weather conditions in January impacted comparable store sales, but that sales started improving in February. That positive trend continued into the first quarter of fiscal 2014, he added.
Revenue from acquired stores contributed $43.5 million in new sales in the fourth quarter, Rochester-based Monro said, offsetting a 5.6-percent drop in comparable store sales. For the fiscal year, new stores added nearly $100 million in additional sales.
Adjusted for days, comparable store sales, fell about 6 percent for tires, alignments and exhaust, 7 percent for front end/shocks and 11 percentt for brakes but were unchanged for maintenance services, according to Monro.
Despite the lower earnings picture, Mr. Van Heel touted Monro's "ability to leverage our strong business model, regardless of the economic or operating environment and to take advantage of increased acquisition opportunities…."
During fiscal 2013 Monro added 139 stores in eight separate acquisitions and ended the year with 937 stores overall in 22 states under seven retail identities.
"These acquisitions enabled us to deliver healthy growth in overall sales for the fourth quarter despite the decline in comparable store sales," Mr. Van Heel said, "while helping us increase our market share and achieve greater economies of scale."
Mr. Van Heel said Monro management believes the firm's acquisition growth in fiscal 2013 positions it "to deliver strong earnings growth over the next several years."
He also said Monro continues to see "attractive acquisition opportunities in the marketplace" and will pursue these opportunities "in a disciplined manner as we leverage our strong balance sheet and business model to drive top-line growth and operating leverage."
Despite the lower earnings, Monro's board of directors approved a 1-cent increase in the company's cash dividend for the first quarter of fiscal year 2014 to 11 cents per share.
Based on current visibility, business and economic trends, and the recent acquisitions, Monro anticipates fiscal 2014 sales to be between $840 million and $865 million, with diluted earnings per share expected in the range of $1.65 to $1.80—up from $1.32 in the year just completed.
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