ROCHESTER, N.Y.—Monro Muffler Brake Inc. reported double-digit increases in operating and net income for the quarter ended Sept. 26 on 8.1-percent higher sales of $239.2 million.
Operating income increased 17.9 percent to $34.1 million, raising the operating margin more than a full point to 14.3 percent. Net income jumped 15.6 percent to $18.9 million.
“We are encouraged by the improvement in our traffic and comparable store sales,” Monro President and CEO John Van Heel said, “which combined with the successful integration of our recent acquisitions has helped us deliver significant operating margin expansion in the first six months of the fiscal year.
“As we move forward, we will continue to actively manage our business through this choppy environment to drive strong bottom-line results. Looking ahead, we remain very encouraged by the opportunities we see to complete additional attractive acquisitions in the second half of fiscal 2016.”
Monro said increased revenue from new stores of $18.5 million combined with a 2.1-percent comparable store sales rise more than offset revenue lost from closed stores, including satellite stores previously operated within BJ's Wholesale Clubs Inc. locations.
Comparable store sales increased approximately 11 percent for alignments, 3 percent for tires and exhaust and 2 percent for brakes and were flat for maintenance services and front end/shocks, Monro said.
The company opened 35 locations and closed five during the quarter, ending the period with 1,029 company-operated stores and 142 franchised Car-X Tire & Auto stores.
During the quarter, the company completed its previously announced acquisition of 27 Kost Tire stores in New York and Pennsylvania and four Windsor Tire/Mass Tire stores in Massachusetts. The stores are expected to add about $31 million in annualized sales, representing a sales mix of 60-percent service and 40-percent tires, Monro said. The Kost Tire stores are being converted to Mr. Tire signage, while the Massachusetts stores are now Monro Muffler outlets.
The acquisitions are expected to be breakeven to slightly accretive in fiscal 2016, as a result of the company's ability to leverage existing distribution quickly in these markets.
For the six-month period, operating income jumped 16.1 percent to $67.6 million on 8.4-percent higher sales of $475.7 million. Net income rose 13.3 percent to $37.7 million.
Based on current visibility, business and economic trends, and the recently completed acquisitions, Monro anticipates fiscal 2016 sales to be in the range of $955 million to $970 million vs. the previous guidance range of $950 million to $970 million.