ROCHESTER, N.Y. — Monro Muffler Brake announced financial results for the first quarter, which ended on June 26.
First quarter sales increased 18.6 percent to a record $87.3 million from $73.6 million in the year-ago period. The sales increase was driven by a .9 percent improvement in comparable store sales, versus 5.9 percent last year. New stores added $13.6 million, including $12.3 million from the newly-acquired Mr. Tire stores. The improvement in comparable store sales was primarily attributable to an approximate 12 percent increase in maintenance services and a 6 percent increase in comparable sales in tire stores.
Gross profit was 42.7 percent of sales compared to 43.8 percent of sales in the first quarter of fiscal 2004, primarily due to increased sales in the lower-margin tire category. Selling, general and administrative expenses decreased to 28.9 percent of sales from 29.9 percent of sales. Net income rose 17.8 percent to a record $7 million, or $.48 per diluted share, within the company’s previously announced expectations. In the comparable period last year, net income was $5.9 million, or $.41 per diluted share. The company opened three new stores, all BJ’s Wholesale Club locations, and closed one in the first quarter.
Robert Gross, president and chief executive officer, commented, “Despite a challenging retail and industry environment marked by a consumer spending slowdown in June, we are pleased with our overall performance in the first quarter, during which we continued to expand both our top and bottom lines. We drove positive comparable store sales through increases in our oil changes and maintenance services. At the same time, we achieved lower SG&A expense as a percent of sales which allowed us to maintain our operating margins and our position as the low-cost operator in the industry. Also, during the quarter, our Mr. Tire acquisition contributed additional tire sales, cost savings and economies of scale, which are reflected in our record first quarter sales and earnings.”
Gross added, “As we move further into fiscal 2005, we intend to build on the solid results of the first quarter. For the second quarter, we currently estimate comparable store sales growth to be between 1 percent and 3 percent, against a 6.6 percent increase last year, and earnings per diluted share to be between $.46 and $.50 versus $.41 in the year-ago period. Additionally, our expansion strategy continues to be an important part of our growth, especially in a weak marketplace where the opportunity to acquire businesses at advantageous prices is greater. We are continually evaluating acquisition candidates who will further expand our market share and develop synergies that will drive our long-term profitability.
“Looking ahead, we expect our oil change and maintenance service businesses to remain strong, and that our Mr. Tire locations will continue to perform well. Additionally, we should benefit from the 3 percent price increase we implemented in July, as well as the fact that last year’s comparable store sales were softer in the second half of the year. However, our first quarter results, combined with the uncertainty of the retail sales environment, have caused us to reduce the high end of our previously estimated range for fiscal 2005 earnings from $1.50 to $1.46,” concluded Gross.
The company’s revised full-year guidance is $1.40 to $1.46 per diluted share, versus $1.18 last year. Annual sales are still expected to range between approximately $345 million to $355 million, which incorporates comparable store sales increases of 2 percent to 4 percent and the opening of 25 new stores in fiscal 2005, of which 20 are projected to be BJ’s Wholesale Club locations.
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