ROCHESTER, N.Y. — Monro Inc. generated 40.3% better operating income during the fiscal year ended March 26 on 20.8% higher sales, despite slowing growth and lower earnings in the fourth quarter.
Operating income for the fiscal year was $101.3 million, or 7.5% of sales, up from $72.2 million, or 6.4% of sales in the prior year. Sales revenue grew to $1.36 billion due to both comparable store sale growth and the first-time addition of revenue from acquisitions.
Net income grew 79.6% to $61.6 million, or $1.81 per diluted share.
Monro also disclosed it has agreed to sell its Tires Now wholesale tire distribution assets to American Tire Distributors Inc. for $105 million and announced plans to repurchase up to $150 million of the company's common stock.
Monro President and CEO Mike Broderick attributed the firm's reduced operating earnings in the fourth quarter — down 44.4% to $11.5 million, or 3.5% of sales — to the negative effects of lower sales growth and "significant investments" in hiring technicians.
The fourth quarter sales increase, up 7.4% to $328 million, was markedly below the 20%-plus growth through the first nine months. Broderick cited a resurgence in COVID-19 cases in a large portion of Monro's market coverage for much of the slowdown.
As for the outlays for new technicians. Broderick said, "While this put pressure on gross margin, it has positioned us to capture growing industry demand for our products and services."
He also pointed out Monro is implementing a strategy to improve its underperforming stores and said the company has seen those efforts paying off.
Monro did not issue a full fiscal 2023 outlook, but Broderick said sales trends "are encouraging," with business in May thus far trending 3% higher after April's comparable store sales were 3% lower than a year ago.
Reviewing fiscal 2022, Monro said comparable store sales increased 15.2%, compared to a decrease of 11.1% in the prior year. Comparable store sales increased approximately 29% for brakes, 26% for alignments, 16% for front end/shocks, 16% for maintenance services and 11% for tires.
The higher comparable store sales resulted in lower fixed distribution and occupancy costs and lower material costs as a percentage of sales, Monro said, but these gains were offset partially by incremental investments in technician headcount and wages to support sales growth amid improving consumer demand.
Monro opened one store during the quarter, ending the year with 1,304 company-operated stores and 80 franchised locations.