Auto services provider Monro (NASDAQ:MNRO) fell short of analysts' expectations in Q2 FY2024, with revenue down 2.34% year on year to $322.1 million. Turning to EPS, Monro's GAAP profit of $0.40 per share was flat year on year.
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Monro (MNRO) Q2 FY2024 Highlights:
- Revenue: $322.1 million vs analyst estimates of $331.3 million (2.79% miss)
- EPS: $0.40 vs analyst estimates of $0.37 (9.59% beat)
- Gross Margin (GAAP): 35.7%, in line with the same quarter last year
- Same-Store Sales were down 2.3% year on year (miss vs. expectations of roughly 1% growth)
- Store Locations: 1,375 at quarter end, decreasing by 2 over the last 12 months
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 1.12% over the last four years (we compare to 2019 to normalize for COVID-19 impacts) was weak as its store count dropped, signaling that growth was driven by more sales at existing, established stores.
This quarter, Monro reported a rather uninspiring 2.34% year-on-year revenue decline, missing analysts' expectations. Looking ahead, the analysts covering the company expect sales to grow 5.38% over the next 12 months.
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 been relatively stable over the last eight quarters but fallen behind the broader consumer retail sector. On average, the company's same-store sales have grown by 1.97% year on year. Given its declining store count over the same period, this performance stems from higher e-commerce sales or increased foot traffic at existing stores, which is sometimes a side effect of reducing the total number of stores.
In the latest quarter, Monro's same-store sales fell 2.3% year on year. This decline was a reversal from the 1.3% year-on-year increase it posted 12 months ago. A one quarter hiccup isn't material for the long-term prospects of a business, but we'll keep a close eye on the company.
Key Takeaways from Monro's Q2 Results With a market capitalization of $775.7 million and more than $9.05 million in cash on hand, Monro can continue prioritizing growth.
Monro missed revenue estimates driven by a decline in same store sales growth that came in below Wall Street Consensus. Gross margin also missed. On the other hand, it was encouraging to see Monro beat analysts' EPS expectations this quarter. The company did not provide formal guidance in the earnings release. Overall, this was a mixed quarter for Monro with mediocre revenue growth. The stock is up 1.13% after reporting and currently trades at $24.98 per share.
The author has no position in any of the stocks mentioned in this report.
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