ROCHESTER, N.Y. — Monro Inc.'s net income fell 33% to $5.86 million as sales decreased 10.3% to $293.2 million for its fiscal first quarter ended June 29.
Income before taxes dropped 32.8% to 8.2 million, compared with the year-ago period.
Comparable store sales slid 9.9%, compared to an increase in comparable store sales of 0.5% in the prior year period.
Comparable store sales decreased 8% for tires, 6% for batteries, 9% for alignments, 10% for maintenance services, 13% for brakes and 15% for front end/shocks, compared to the prior year period.
Total operating expenses for the first quarter were $95.9 million, or 32.7% of sales, as compared to $97 million, or 29.7% of sales, in the prior year period. The decrease on a dollar basis was principally due to lower store direct costs, the company said.
Operating income was $13.2 million, or 4.5% of sales, as compared to $17.3 million, or 5.3% of sales, in the prior year period.
During the first quarter Monro closed four stores, ending the period with 1,284 company-operated stores and 51 franchised locations.
"We drove a significant acceleration in our comparable store sales trends as the first quarter progressed. Importantly, we turned the corner in our tire category with a return to growth in units in the month of June, as we continued to leverage the strength of our manufacturer-funded promotions," Monro President and CEO Mike Broderick said.
"The combination of our ConfiDrive digital courtesy inspection process, service coupon and oil change offer allowed us to drive growth in both battery units and sales dollars in the month of June as well as an improvement in our higher-margin service categories as the quarter progressed. Our gross margin expansion in the quarter represents another major step toward restoring our gross margins back to pre-COVID levels."
For the second quarter, Monro intends to drive traffic with oil change services, as well as continue growth in tire unit sales, in addition to "prudent" cost control.
The company actively promoted tires in June which helped boost unit growth. Broderick said the company will continue to run promotions for tier one through three brands, primarily funded through manufacturers, to drive the tire category and "get more than our fair share" of tire sales.
Broderick admitted the highly profitable service categories are still underperforming. The ConfiDrive inspection process helped to boost battery sales in July.
"We're going to get back our service categories and that's across the board. And I feel that's very much in our control; it has nothing to do about the consumer. There's still a lot of brakes being sold in the marketplace and we're going to go get more than our fair share of brakes," he said.
Most of Monro's productivity initiatives involve making hourly staff more productive. He said the stores are well-staffed, employing more technicians who work on flat rate than last year.
"In the past it's taken as long as 90 days to get them productive and now we're talking about three weeks. And that's the big change in our organization and it's really a Monro story," he said, calling it a "self-help story."