ROCHESTER, N.Y. -- Monro Muffler Brake has announced its financial results for the first quarter ended June 27.

Sales for the first quarter of fiscal 2010 increased 6.4 percent to a record $128 million compared to $120.4 million for the first quarter of fiscal 2009. The company said sales growth was driven by strong in-store sales execution as well as continued highly effective advertising campaigns. Comparable store sales increased 6.2 percent, on top of 5.6 percent growth for the first quarter of the prior year, and were at the high end of the company's previously estimated range of 4 percent to 7 percent. Comparable store sales increased approximately 6 percent for brakes, 6 percent for maintenance services and 7 percent for tires.

Gross margin increased to 44.1 percent in the first quarter from 42.3 percent in the prior year quarter due to price increases that were implemented in response to increased material costs. Other contributing factors were increased vendor rebates, reduced labor costs and leveraging of fixed occupancy costs. The expansion in gross margin was partially offset by the shift in sales mix towards the lower-margin tire and maintenance services categories. Total operating expenses were $39.4 million, or 30.8 percent of sales, compared with $36.9 million, or 30.7 percent of sales, for the same period of the prior year.

Operating income for the quarter increased 21.7 percent to a record $17 million from $14 million in the first quarter of fiscal 2009. Interest expense was $1.9 million compared with $1.5 million in the first quarter of fiscal 2009.

Net income for the first quarter increased 20.7 percent to a record $9.4 million compared to $7.8 million for the prior year period. Diluted earnings per share for the quarter increased 17.9 percent to a record 46 cents, compared to diluted earnings per share of $.39 in the first quarter of fiscal 2009, and came in at the high end of the company's estimated range of 42 cents to 47 cents. Net income for the first quarter reflects an effective tax rate of 37.8 percent compared with 37.6 percent for the prior year period.

The company opened 30 locations during the quarter, ending the first quarter with 740 stores, which includes the 26 Autotire Car Care Center locations acquired in June 2009.

Robert Gross, chairman and chief executive officer, stated, "We are pleased with our results for the first quarter and our ability to extend our strong performance of last year into the new fiscal year, especially given ongoing challenges in the economic environment. Our team's exceptional execution led to comparable store sales growth of 6.2 percent as well as continued expansion in gross margin and substantial growth in operating income. Our advertising strategy continued to effectively complement our low-cost and efficient business model and helped to drive an approximate 2 percent increase in store traffic. Additionally, we further expanded our market share as we integrated the recently-acquired Autotire business and continued to benefit from reduced competition and dealership closures. As a result, we broadened our customer base to include new groups of customers with whom we have begun to build long-term, trust relationships."

Based on current visibility and business and economic trends, the company anticipates comparable store sales growth in the range of 5 percent to 7 percent for the second quarter of fiscal 2010. The company also expects diluted earnings per share for the second quarter to be in the range of 43 cents to 48 cents, compared with 38 cents for the second quarter of fiscal 2009.

For fiscal 2010, the company continues to anticipate comparable store sales growth in the range of 4 percent to 7 percent. The company continues to expect total fiscal 2010 sales in the range of $515 million to $530 million. The company positively adjusted its estimated range for fiscal 2010 diluted earnings per share to $1.35 to $1.45 from its previously estimated range of $1.30 to $1.45. The estimate is based on 20.4 million weighted average shares outstanding.

Gross concluded, "We are pleased to have delivered another strong quarterly performance and are delighted that the solid traction that our business has gained in fiscal year 2009 is continuing into the new fiscal year. Currently, our July comparable store sales are up approximately 7 percent, on top of 7.7 percent growth for last July. Further, we are pleased with the progress that we have made in integrating Autotire into the Monro family and believe we are positioned to take advantage of additional value-added acquisition opportunities as they arise. We remain optimistic about our prospects for continued growth and market share expansion, and expect that our company-operated stores and low cost business model will allow us to continue to produce solid results. That said, we recognize that the economic environment remains uncertain, which may further impact consumer confidence and spending as we head into the fall."