ROCHESTER, N.Y.—Don't expect Monro Muffler Brake Inc.'s acquisition strategy to slow down anytime soon: The Rochester-based retailer has a deal pending to buy a nine-store dealership before year-end and 10 more in non-disclosure agreements signed with potential acquisition targets.
Monro recently acquired Wood & Fullerton Inc., a nine-store predominantly Goodyear dealership in the Atlanta metro area. The Wood & Fullerton stores are Monro's first in Georgia and provide a bridge of sorts between Monro's established store network in South Carolina and the 35 Tire Choice stores Monro acquired earlier this year.
However, Monro said it is phasing out its Monro Muffler Brake and Service stores in 29 BJ's Wholesale Club Inc. locations due to limited growth opportunities these stores represent since they don't offer tires.
Monro has operated satellite stores within BJ's locations since 1999. The retailer said this business model was used originally to fill in selected markets, but market conditions have now changed.
The number of Monro stores at BJ's locations peaked at 37 a few years ago. Monro did not say when it expects to have these operations closed.
Monro remains “very optimistic about our opportunities for additional deals in the near future and we expect fiscal 2015 to be a significant year for acquisitions,” Monro President and CEO John Van Heel said during the firm's second-quarter earnings conference call with financial analysts, Oct. 23.
A pending acquisition agreement for a nine-store dealership within its existing footprint involves about $10 million in annual sales, Monro said.
“A difficult operating environment will allow us to complete even more deals and further accelerate our top line growth. This represents our key hedge in our business model,” he said.
The Wood & Fullerton and Tire Choice acquisitions, in Georgia and Florida, respectively, “will balance our exposure to northern, northeastern and central markets providing many years of profitable expansion,” Mr. Van Heel said, adding that Monro feels acquisitions made in fiscal 2015 will exceed the firm's 10-percent annualized sales growth target outlined in Monro's five-year plan.
“In fact,” he said, “the acquisitions we have completed to date in fiscal 2015 already represent 9-percent annualized sales growth this fiscal year and continue to outperform plan. We do, however, expect slight dilution in the third and fourth quarters from these acquisitions.”
In a letter to customers posted on the Wood & Fullerton website—which is redirected to the Mr. Tire website—Wood & Fullerton President Dolores Wood Rodden thanked customers for their business throughout the dealership's 50-plus years.
“The store signs will change,” she wrote, “but not the professional staff you've come to know and trust. The same menu of automotive services will be available, including oil changes, brakes, alignments, scheduled maintenance, diagnostics and repairs—and, of course, tires!”
She wrote that Monro/Mr. Tire will honor all Wood & Fullerton guarantees.
Financial terms of the deal were not disclosed.
Wood & Fullerton's stores are located in Alpharetta (two locations), Canton, Dunwoody, Johns Creek, Norcross, Roswell (two locations) and Woodstock, Ga. All are communities north of Atlanta.