Stock Story -
Auto services provider Monro (NASDAQ:MNRO) missed analysts' expectations in Q1 CY2024, with revenue flat year on year at $310.1 million. It made a non-GAAP profit of $0.21 per share, improving from its profit of $0.08 per share in the same quarter last year.
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Monro (MNRO) Q1 CY2024 Highlights:
- Revenue: $310.1 million vs analyst estimates of $320.2 million (3.2% miss)
- EPS (non-GAAP): $0.21 vs analyst expectations of $0.30 (30.9% miss)
- Gross Margin (GAAP): 35.5%, up from 33.4% in the same quarter last year
- Same-Store Sales were up 0.1% year on year
- Store Locations: 1,339 at quarter end, increasing by 40 over the last 12 months
- Market Capitalization: $776.3 million
Started as a single location in Rochester, New York, Monro (NASDAQ:MNRO) provides common auto services such as brake repairs, tire replacements, and oil changes.
Auto Parts RetailerCars are complex machines that need maintenance and occasional repairs, and auto parts retailers cater to the professional mechanic as well as the do-it-yourself (DIY) fixer. Work on cars may entail replacing fluids, parts, or accessories, and these stores have the parts and accessories or these jobs. While e-commerce competition presents a risk, these stores have a leg up due to the combination of broad and deep selection as well as expertise provided by sales associates. Another change on the horizon could be the increasing penetration of electric vehicles.
Sales GrowthMonro is a small retailer, which sometimes brings disadvantages compared to larger competitors that benefit from economies of scale.
As you can see below, the company's annualized revenue growth rate of 1.2% over the last five years was weak as its store footprint remained relatively unchanged, implying that growth was driven by more sales at existing, established stores.
This quarter, Monro missed Wall Street's estimates and reported a rather uninspiring 0.2% year-on-year revenue decline, generating $310.1 million in revenue. Looking ahead, Wall Street expects sales to grow 1.5% over the next 12 months, an acceleration from this quarter.
Same-Store SalesA company's same-store sales growth shows the year-on-year change in sales for its brick-and-mortar stores that have been open for at least a year, give or take, and e-commerce platform. This is a key performance indicator for retailers because it measures organic growth and demand.
Monro's demand within its existing stores has barely increased over the last eight quarters. On average, the company's same-store sales growth has been flat.
In the latest quarter, Monro's year on year same-store sales were flat. By the company's standards, this growth was a meaningful deceleration from the 4.5% year-on-year increase it posted 12 months ago. We'll be watching Monro closely to see if it can reaccelerate growth.
Key Takeaways from Monro's Q1 Results We struggled to find many strong positives in these results. Its revenue and EPS missed analysts' expectations as its same-store sales fell short of estimates - management blamed a weak tire market for the underperformance. Overall, this was a mediocre quarter for Monro. The company is down 12.2% on the results and currently trades at $22.8 per share.
