Monro Narrowed Loss as Store Closures Lifted Results
First-quarter sales fell 4.6% to $287.1 million as closed locations weighed on revenue.
The automotive tire and service retailer Monro Inc. (MNRO) narrowed its first-quarter net loss to $2.1 million, or $0.08 a share, from $8.1 million, or $0.28 a share, a year earlier. The loss also improved from $6.6 million in the preceding quarter.
The improvement reflected a sharp reduction in store-closing expenses, while the underlying business remained weaker than a year earlier. Adjusted results swung to a $2.3 million loss, or $0.09 a share, from income of $7.0 million, or $0.22 a share.
Sales declined 4.6% to $287.1 million, easing from the fourth quarter’s 7.2% drop. Revenue increased 4.9% sequentially from $273.8 million. Comparable-store sales fell 1.7%, improving from a 2.4% decline in the preceding quarter after rising in both the second and third quarters.
Battery sales provided the clearest operating lift, with comparable sales rising 8% after declining in each of the previous three quarters. Tire comparable sales fell 1%, though unit volume was flat as promotions and a broader selection of lower-cost tires supported demand. Maintenance-service comparable sales weakened to a 5% decline.
Gross margin contracted 50 basis points as higher occupancy costs outweighed lower technician-labor costs. That reversed three consecutive quarters of margin expansion and contributed to an 85% decline in adjusted operating income to $2.2 million, equal to 0.8% of sales.
GAAP operating income improved to $3.7 million from a $6.1 million loss a year earlier, helped by a $3.0 million net gain from store-closing items compared with $14.8 million of net costs. Operating expenses fell to $96.7 million as lower closing and closed-store costs more than offset higher marketing and continuing-location expenses.
The closure of 145 underperforming stores reduced sales by $9.0 million, though Monro ended the quarter with 1,115 locations, unchanged from a year earlier. Consulting costs tied to its operational-improvement plan declined to $1.0 million, while long-term debt rose to $108.4 million and cash fell to $9.5 million.