Monro President and CEO John Van Heel said the earnings improvement, achieved despite a “choppy economic environment,” further demonstrates that the firm's business model is working.
“…comparable store sales in key service categories, including oil changes, brakes, front end/shocks and alignments,” he said, “were all higher for the year, confirming that our customers continue to choose Monro for automotive service that they can no longer defer.”
He noted these positive sales trends were offset by deflation in tire prices, which negatively impacted comparable store sales by nearly 1 percent for the year.
“However, as expected, average tire selling price turned positive compared to last year as we progressed through the fourth quarter,” he added.
In the fourth quarter, Monro reported 9.8- and 5.4-percent gains in operating and net income, respectively, on 7.8-percent higher sales.
Mr. Van Heel said Monro's positive fourth quarter performance was achieved despite a “disruption in our business from inclement weather, which negatively impacted our traffic and sales across all of our categories, particularly in February.”
Net income in the quarter was a record $12.6 million on record quarterly sales of $219.1 million.
Besides the Car-X acquisition, Monro said it made an eight-store acquisition on Florida's east coast, but it didn't identify the dealership it bought.
Acquisitions completed in fiscal 2015 represent annualized sales of about $85 million, or 10 percent sales growth over 2015, Monro said. The acquired businesses have an approximate sales mix of 60 percent service and 40 percent tires.
Monro said adding stores in large markets in Michigan and Georgia “represent a significant opportunity for continued store growth, while further diversifying the company's exposure to north central and northeastern markets.”
Looking to fiscal 2016, Mr. Van Heel said, “While we remain cautious in the short-term, our outlook for the industry remains positive. We continue to actively manage our business, with a focus on driving traffic and top line growth, maintaining diligent cost control and realizing greater economies of scale through additional acquisitions.”
Monro said it expects fiscal 2016 sales to be in the range of $935 million to $955 million — or growth of 4.5 to 6.7 percent — based on comparable store sales growth of 1 to 3 percent, a full year of sales from fiscal 2015 acquisitions and royalties from the Car-X acquisition. The gains will be offset to a degree by the sales lost from stores closed during the year, including 34 stores in BJ's locations.