Monro Reports Q3 Revenue of $293.39M, Below Expectations
Reports Q3 revenue $293.39M, consensus $295.19M. Comparable store sales, adjusted for days, decreased 0.8% in the prior year period. Comparable store sales, unadjusted for days, decreased 1.9% in the prior year period. "After we saw some softness in consumer demand in October, the Monro team drove growth in comparable store sales in November and December. Further, when adjusting for a shift in the timing of the Christmas holiday in the prior year, the months of November and December as well as the third quarter, mark the first time we delivered positive comps on a 2-year stack in over two years. This has also enabled us to report our fourth consecutive quarter of positive comps for the first time in several years. We believe we were able to take share in our tire category as soon as winter hit as our stores were well-prepared with proper staffing, an updated tire assortment, and additional marketing spend. For the second quarter in a row, we delivered solid gross margin performance with a gross margin rate that expanded 60 basis points year-over-year to 34.9%. We also re-invested the selling, general, and administrative expense savings from our closed stores into additional marketing to support topline growth. For the third quarter in a row, we reduced inventory levels across the system, this time by over $7 million. We have now achieved an overall inventory reduction of more than $28 million, which is 16% since the end of March, just nine months ago. This is a clear indication of how we've continued to manage our inventories more efficiently in fiscal 2026", said Peter Fitzsimmons, president and CEO.
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Monro Reports Q3 Results: Sales Decline but Profit Growth
- Sales Performance Review: Monro's Q3 sales totaled $293.4 million, a 4% decline year-over-year primarily due to the closure of 145 underperforming stores, although comparable store sales increased by 1.2%, indicating resilience in continuing locations.
- Gross Margin Improvement: The gross margin expanded by 60 basis points year-over-year to 34.9% in Q3, driven by lower material costs and reduced occupancy costs as a percentage of sales, despite rising technician labor costs due to inflation, reflecting effective cost management.
- Operating Expense Optimization: Total operating expenses for Q3 were $83.8 million, or 28.6% of sales, significantly down from 31% in the prior year, primarily due to cost savings from closed stores and net gains from real estate dispositions, enhancing the company's financial flexibility.
- Net Income Growth: Net income for Q3 reached $11.1 million, a 143.1% increase from $4.6 million in the same period last year, with diluted earnings per share at $0.35, demonstrating a significant improvement in profitability amidst challenges.
Monro, Inc. Q3 2026 Earnings Call Highlights
- Sales Performance Overview: Monro, Inc. reported Q3 sales of $293.4 million, a 4% decline primarily due to the closure of 145 underperforming stores, yet a 1.2% increase in comparable store sales indicates business resilience.
- Gross Margin Improvement: The company achieved a 60 basis point year-over-year increase in gross margin to 34.9%, driven by lower material costs and optimized operating expenses, demonstrating effective cost control measures.
- Real Estate Disposition Progress: During the quarter, Monro exited 32 leases and sold 20 owned locations, generating proceeds of $17.3 million, with cumulative proceeds reaching $22.8 million, expected to support future cash flow.
- Digital Marketing Expansion: The company expanded its multichannel digital media plan to over 340 additional stores and added call center support to 114 more locations, enhancing customer experience and sales effectiveness, further boosting brand impact.
