ROCHESTER, N.Y. — Monro Muffler Brake Inc. reported a 5.1-percent increase in operating income in the quarter ended June 24 on 18.4-percent higher sales, generated primarily by the first-time accounting of recent acquisitions.
Operating income rose to $33.7 million, while sales increased to $278.5 million, reducing the operating margin to 12.1 percent. Revenue from acquisitions accounted for 80 percent of the quarterly sales increase, Monro said.
Comparable store sales also rose, by 1.4 percent, Monro said, fueled by increased revenue from brakes (6 percent) and front end/shocks (3 percent), while revenue was flat for tires and maintenance services and down 2 percent for alignments.
Monro President and CEO John Van Heel said the positive trends of the first quarter continued into July, with comparable store sales running about 1.5 percent ahead of the prior year period, with higher margins in both the tire and service categories.
During the quarter, the company opened seven and closed six locations, ending the period with 1,119 company-operated stores.
The company also disclosed it has signed agreements to acquire 20 stores, including eight from an existing Car-X franchisee. These stores will fill in voids in existing markets of Michigan, Illinois and Indiana and are expected to add approximately $13 million in annualized sales revenue.
Monro did not disclose the identities or locations of the stores to be acquired.
Based on the company's current business situation and prevailing economic trends, Monro said it anticipates fiscal 2018 sales to be in the range of $1.14 billion to $1.16 billion, an increase of 11 to 13 percent from fiscal 2017. Diluted earnings per share for the year should be in the range of $2.05 to $2.20, slightly lower than previously disclosed to reflect 6 cents per share in incremental costs related to the management transition and the revised comparable store sales guidance.