ROCHESTER, N.Y. (Jan. 26, 2016) — Monro Muffler Brake Inc.'s operating income fell 5.7 percent in the quarter ended Dec. 26 due to lower tire sales, which Monro tied to “unseasonably” warm weather throughout its markets.
Operating income for the company's third quarter fell to $26.4 million on 1-percent higher sales of $238.9 million, for an 11.1-percent earnings ratio. Net income fell 5 percent to $15.2 million.
Monro President and CEO John Van Heel said tire sales were noticeably lower in November, but that the company is “encouraged to see that traffic and tire sales trends have rebounded, resulting in an approximate 10-percent increase in comparable store sales” for the fiscal month ended Jan. 23.
Looking ahead, Mr. Van Heel said Monro believes its “strong business model will continue to drive long-term sales and earnings growth” and management remains “very optimistic about the significant number of acquisition opportunities we see in the marketplace.”
Monro recently raised its credit facility to $600 million from $250 million to provide it with the increased flexibility to pursue acquisitions and other business opportunities “even more aggressively.”
Monro noted that its third-quarter revenue hike of $2.4 million was due primarily to an increase in sales from new stores of $13.9 million — including sales from recently acquired stores of $13 million — but partially offset by a 2.5-percent comparable store sales drop, including a 4-percent decline in tire sales.
For non-tire categories, Monro reported comparable store sales increases of approximately 6 percent for alignments and 2 percent for brakes. Comparable store sales in exhaust were flat and down about 3 percent for both maintenance services and front end/shocks.
The company said it opened seven locations and closed five during the quarter, leaving it with 1,031 company-operated stores and 137 franchised Car-X stores.
For the nine-month period ended Dec. 26, operating income increased 9.1 percent to $94.1 million as sales grew 5.8 percent to $714.6 million, with most of the growth coming from new stores.
Net income rose 7.4 percent to $52.9 million, or $1.59 per diluted share.
Based on year-to-date results, business and economic trends and recently completed acquisitions, Monro said it now expects fiscal 2016 sales to be in the range of $947 million to $955 million, down slightly from previous forecasts.
Fiscal 2016 sales guidance assumes comparable store sales will be flat to 1 percent above 2015.