Stock Story -
Auto services provider Monro (NASDAQ:MNRO) reported results in line with analysts' expectations in Q2 CY2024, with revenue down 10.3% year on year to $293.2 million. It made a non-GAAP profit of $0.22 per share, down from its profit of $0.31 per share in the same quarter last year.
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Monro (MNRO) Q2 CY2024 Highlights:
- Revenue: $293.2 million vs analyst estimates of $293.6 million (small miss)
- EPS (Non-GAAP): $0.22 vs analyst estimates of $0.00
- Gross Margin (GAAP): 37.2%, up from 35% in the same quarter last year
- Locations: 1,335 at quarter end, up from 1,299 in the same quarter last year
- Same-Store Sales fell 9.9% year on year (0.5% in the same quarter last year)
- Market Capitalization: $779.4 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 revenue was flat over the last five years as its store footprint remained relatively unchanged.
This quarter, Monro missed Wall Street's estimates and reported a rather uninspiring 10.3% year-on-year revenue decline, generating $293.2 million in revenue. Looking ahead, Wall Street expects revenue to decline 1.5% over the next 12 months.
Same-Store SalesSame-store sales growth is an important metric that tracks demand for a retailer's established brick-and-mortar stores and e-commerce platform.
Monro's demand has been shrinking over the last eight quarters, and on average, its same-store sales have declined by 1.2% year on year. This performance is quite concerning and the company should reconsider its strategy before investing its precious capital into new store buildouts.
In the latest quarter, Monro's same-store sales fell 9.9% year on year. This decline was a reversal from the 0.5% year-on-year increase it posted 12 months ago. We'll be keeping a close eye on the company to see if this turns into a longer-term trend.
Key Takeaways from Monro's Q2 Results We were impressed by how significantly Monro blew past analysts' gross margin and EPS expectations this quarter. Overall, we think this was a really good quarter that should please shareholders. The stock traded up 7.2% to $27.93 immediately following the results.
