ROCHESTER, N.Y. — Monro Inc. is cautioning shareholders that its fiscal 2020 fourth quarter and annual results will reflect the negative effects of reduced business activity during the final weeks of the quarter due to the COVID-19 pandemic.
Monro, which operates 1,298 retail auto service and tire shops across the country under nine brands, said it expects fiscal 2020 diluted earnings per share to be "well below" the low end of its previously issued guidance range of $2.25 to $2.35, which did not include the impact of COVID-19.
The Rochester-based company said its fourth quarter sales should be about $286.1 million, or 0.4% below the fiscal 2019 quarter. Monro attributed the decline to a comparable store sales decrease of approximately 9.5%, offset by sales from new stores. The fiscal year ended March 31.
The company noted its stores have been deemed essential services and continue to operate on reduced hours, even in those areas that have issued "shelter-in-place" orders.
The decline in comparable store sales was driven largely by a "substantial decrease" in traffic since mid-March as government authorities took actions to curb the COVID-19 outbreak. In addition, mild weather in the company's Northern markets during January and February impacted comparable store sales negatively during the quarter.
More problematic, though, was a comparable store sales decrease of approximately 45% during the last week of the quarter. Monro said it expects the slowdown in traffic to continue to impact its top line performance negatively in the first quarter of fiscal 2021, as authorities have announced expanded measures to prevent the further spread of COVID-19.
Monro said it believes its "solid balance sheet and strong liquidity position" provide ample financial flexibility to support its business operations in the current environment.
On a day-to-day basis, Monro closely is monitoring the guidelines of local, state and federal officials and has implemented, and continues to adjust comprehensive business contingency plans in response to COVID-19 to ensure that its stores are operating efficiently, while focusing on the health and safety of its teammates and customers.
"First and foremost, Monro is focused on the safety and well-being of our teammates, customers and the communities that we serve during this critical period," Monro President and CEO Brett Ponton said.
"As our stores remain open to provide essential services during the COVID-19 pandemic, we are focused on the areas of our business within our control, including aligning labor with demand, reinforcing disciplined cost management protocols and leveraging our diversified supply chain.
"While COVID-19 significantly impacted our fourth quarter financial results, and continues to impact our store operations, we believe our ample liquidity and solid balance sheet position us well to navigate this challenging environment."
Given the prevailing uncertain market conditions, the company said it has taken "appropriate precautionary steps" to further mitigate near-term headwinds and strengthen its cash position, including:
- drawing down the remaining $350 million from its revolving credit facility;
- deferring non-critical capital expenditures including store reimage;
- reducing store hours and store labor to match demand;
- reducing selling, general and administrative expenses; and
- bolstering its working capital position.