ROCHESTER, N.Y. — Monro Inc. increased sales 10.4 percent to a record $1.13 billion for its fiscal year, ended March 31, contributing to a 3.9-percent jump in net income to $63.9 million.
The growth was driven by increased sales from new stores of $96.2 million, including sales from recent acquisitions of $73.5 million, and a comparable store sales increase of 1.8 percent on a reported basis, Monro said.
Comparable store sales, adjusted for days, increased approximately 3 percent for brakes and 2 percent for front end/shocks and decreased about 1 percent for tires and 2 percent for both maintenance services and alignments.
Gross margin declined 30 basis points to 38.6 percent for fiscal 2018 from 38.9 percent in the prior fiscal year, largely due to the impact of the sales mix from recent acquisitions, partially offset by lower material costs as a percentage of sales, Monro said.
Operating income for fiscal 2018 jumped 9.4 percent to $127.3 million, or 11.3 percent of sales, compared with fiscal 2017.
For the fourth quarter, Monro said it increased sales 13.3 percent to $285.6 million, noting that fiscal 2018 was a 53-week year with 368 selling days as compared with 361 selling days in fiscal 2017, and therefore included an extra week of sales in the fourth quarter.
Adjusted for days, comparable store sales increased approximately 5 percent for tires, 2 percent for brakes and front end/shocks and decreased about 2 percent for both maintenance services and alignments.
"We delivered solid fourth quarter results, driven by positive top-line trends and strong execution across our business, as we launched a number of foundational tools designed to support our strategy," Monro President and CEO Brett Ponton said.
In addition to the extra week of sales, the total fourth-quarter increase included a boost in sales from new stores of $13.8 million, with recent acquisitions contributing $8.7 million to the total.
Operating income jumped 51.5 percent to $30.4 million, representing 10.7 percent of sales, compared with a year ago. Net income for the quarter surged 81 percent to $17.5 million.
Monro noted that enactment of the Tax Cuts and Jobs Act on Dec. 22 resulted in an income tax benefit of $1.4 million. This resulted in an effective tax rate of 27.9 percent in the fourth quarter, compared with 34.4 percent in the prior year period.
"We exit the quarter with solid industry tailwinds, improving operating performance, a disciplined acquisition strategy and newly implemented initiatives to drive improvement across the organization," Mr. Ponton said.
During the fourth quarter, Monro completed acquisitions of seven stores in Ohio, Kentucky, West Virginia and Virginia, filling in existing markets. These stores are expected to add approximately $7 million in annualized sales, representing a sales mix of 45 percent service and 55 percent tires. Acquisitions completed in fiscal 2018 represent a total of $20 million in annualized sales.
Monro also closed three company-operated locations and opened 15 during the quarter, ending the fiscal year with 1,150 company-operated stores and 102 franchised locations.
"As we enter fiscal 2019, we are excited about the significant opportunities that lie ahead of us. I am confident that our renewed focus on the customer and strong commitment to operational excellence will position us well to capitalize on favorable industry trends over the next few years and drive sustainable long-term value for our shareholders," Mr. Ponton said.
"We believe we have a clear path for future growth and look forward to carrying this strong momentum through fiscal year 2019 and beyond."