Executive Summary
Monro Inc (MNRO) reported a mixed performance for the third quarter of fiscal 2025, facing headwinds from a challenging consumer environment that affected sales across its tire categories. Revenue for the quarter was $305.8 million, a decrease of 3.7% year-over-year, while net income fell to $4.6 million, losing approximately 62% compared to the same period last year. However, Monro demonstrated resilience by returning to year-over-year comparable store sales growth in December, aided by successful promotional strategies targeting value-oriented customers. The management is optimistic about future quarters, anticipating improvements backed by their ConfiDrive Digital Courtesy Inspection process and a focus on optimizing labor and store efficiencies.
Key Performance Indicators
QoQ: -18.84% | YoY:23.86%
QoQ: -16.67% | YoY:25.00%
Key Insights
**Revenue:** $305,769,000 (YoY: -3.7%, QoQ: +1.6%)
**Gross Profit:** $104,803,000 (YoY: -4.8%, QoQ: -1.5%)
**Operating Income:** $11,000,000 (YoY: -48.4%, QoQ: -12.4%)
**Net Income:** $4,583,000 (YoY: -62.5%, QoQ: -18.8%)
**EBITDA:** $27,188,000
**EPS:** $0.15 (YoY: -60.5%, QoQ: -16.7%)
**Current Ratio:** 0.539
**Debt to Equity Ratio:** 0.830
**Free Cash Flow:** $7,914,000
*Management noted a commitment to maintaining operational adjustments for profitability despite the pressu...
Financial Highlights
Revenue: $305,769,000 (YoY: -3.7%, QoQ: +1.6%)
Gross Profit: $104,803,000 (YoY: -4.8%, QoQ: -1.5%)
Operating Income: $11,000,000 (YoY: -48.4%, QoQ: -12.4%)
Net Income: $4,583,000 (YoY: -62.5%, QoQ: -18.8%)
EBITDA: $27,188,000
EPS: $0.15 (YoY: -60.5%, QoQ: -16.7%)
Current Ratio: 0.539
Debt to Equity Ratio: 0.830
Free Cash Flow: $7,914,000
Management noted a commitment to maintaining operational adjustments for profitability despite the pressure on gross margins, which declined by 120 basis points due to increased self-funded promotions targeting the value-oriented consumer.
Income Statement
Metric |
Value |
YoY Change |
QoQ Change |
Revenue |
305.77M |
-1.39% |
1.45% |
Gross Profit |
104.80M |
-4.77% |
-1.48% |
Operating Income |
11.00M |
6.40% |
-12.37% |
Net Income |
4.58M |
23.86% |
-18.84% |
EPS |
0.15 |
25.00% |
-16.67% |
Key Financial Ratios
operatingProfitMargin
3.6%
operatingCashFlowPerShare
$0.49
freeCashFlowPerShare
$0.26
Management Commentary
Key Themes:
- Sales Initiatives: Management emphasized strong trends in December, showing a recovery with positive comparable store sales growth driven by strategic promotions and the adoption of the ConfiDrive Digital Courtesy Inspection process.
- Profitability Focus: Management indicated a readiness to invest in pricing and promotions to enhance top-line growth, even at the expense of short-term margins. Michael Broderick stated, "We remain committed to sales and unit growth and improving customer counts..."
- Outlook on Weather Impact: The impact of extreme weather conditions was also noted, with management indicating it might have a positive effect on tire sales in the upcoming months.
"We continue to leverage the strength of our manufacturer funded promotions, which allowed us to meet the needs of a value-oriented consumer."
β Michael Broderick
"We are confident, we remain on a path to restore our gross margins back to pre-COVID levels with double-digit operating margins over the longer term as we return to top line growth."
β Michael Broderick
Forward Guidance
Management's outlook for FY2025 includes expectations of improving comparable sales driven by oil change offers and inventory optimization across all stores. A focus on pricing integrity and improving margins while supporting promotional activities is anticipated to drive revenue growth. The preliminary sales for January indicate a potential 1% downturn, primarily due to weather-related disruptions. However, management is optimistic about recovery as winter conditions improve in subsequent quarters.