FAIRPORT, N.Y. — Monro Inc. suffered double-digit drops in operating income for the quarter and nine-month periods ended Dec. 28 as the company's operating expenses rose while revenue sank.
Monro's operating income for the third quarter plunged 53% to $10 million, or 3.3% of sales, and was down 40% for the first nine months of the fiscal year to $36.4 million, or 4% sales, the company reported.
Net income fell 62% in the quarter to $4.6 million and 52.5% to $16.1 million for the nine-month period.
Comparable store sales decreased 0.8% when adjusted for one less selling day in the quarter due to a shift in the timing of the Christmas holiday. Comparable store sales dropped 6.1% in the prior year period.
Comparable store sales increased 30% for batteries, 13% for alignments and 6% for front end/shocks; and decreased 1% for tires, 2% for maintenance services and 6% for brakes compared to the prior year period.
Sales for the quarter were $305.7 million, down 3.7% from $317.7 million the prior year period. For the nine-month period, sales dropped 6.9% to $900.3 million.
Monro closed 9 stores during the quarter, ending with 1,263 company-operated stores and 48 franchised locations.
Monro attributed lower gross margins to higher material costs due to mix within tires and an increased level of self-funded promotions to attract value-oriented consumers, which were partially offset by lower technician labor costs as a percentage of sales.
Operating expenses for the third quarter were $94.8 million, up 3.9% from $91.3 million in the prior year period.
Monro paid a cash dividend for the third quarter of 28 cents per share.
Monro didn't offer guidance on the full fiscal year, but President and CEO Mike Broderick touched on the impact of weather on comparable store sales.
"Our preliminary fiscal January comparable store sales are down 1%, adjusted for one additional selling day in the month," Broderick said.
"This is driven by weakness in tire category sales that were impacted by extreme weather, which resulted in temporary store closures and lower store traffic, partially offset by strength in our service categories, including brakes. We believe the extreme weather in January will benefit us in the coming months."