Monro Sales Down, Income Up

ROCHESTER, N.Y.--Sales at Monro Muffler Brake Inc. were down slightly, but the company predicts a beter future. Monro operates 513 stores and has 19 dealer locations in New York, Pennsylvania, Ohio, Connecticut, Massachusetts, West Virginia, Virginia, Maryland, Vermont, New Hampshire, New Jersey, North Carolina, South Carolina, Indiana, Rhode Island, Delaware and Michigan.

For the fiscal year 2001 third quarter, sales were $51.8 million, compared to $52.1 million for the corresponding quarter that ended in December of 1999.

The decrease was due to a comparable store sales decrease of 3.2 percent caused, in part, by one less sales day. Management believes that inclement weather also contributed to the decline. This decrease was partially offset by an increase in sales from new stores of $700,000.

Net income for fiscal 2001’s third quarter rose 19 percent to $1.4 million, or 15 cents per diluted share, as compared to $1.1 million, or 13 cents per diluted share, in the prior year period.

Sales for the nine months ending in December of 2000 decreased 0.4 percent to $172.9 million from $173.6 million in the comparable period last year. Net income for the nine months increased 17.5 percent to $8.3 million, as compared to $7.1 million in the first nine months of the prior year.

“While we are pleased to be reaping the benefits of improved productivity, strong cost control, and further leveraging of the Speedy acquisition, all resulting in a 19 percent earnings growth, we are disappointed in sales,” said Robert G. Gross, president and chief executive officer. “The encouraging news is that the average daily traffic was up again this quarter by 0.8 percent. This now represents the third consecutive quarter of increasing traffic counts and, with our numerous other sales initiatives, bodes well for future sales growth,” he said.

“We are also pleased to announce that we have been building on our strategy to market more well-recognized product brands in our stores to enhance sales. During December, we began selling Goodyear tires in addition to the Firestone brand, offering our customers further choice. In March, once most of the cold weather is behind us, we plan to start selling the popular Monroe brand shocks and struts, the most recognized brand of ride control products in the industry. We expect these products to contribute to a future growth in sales, as they will create significant sales promotional opportunities,” said Gross.

“Oil changes were up 9 percent over last year’s third quarter, a clear indication that there has been virtually no resistance to our $2 price increase implemented in October. We believe this is because we remain at least $4 less expensive than most competitors. Recently, we instituted a service fee to cover shop supply and environmental costs previously not passed on to the customer. We are one of the last companies to adopt this practice, and it has received nearly universal acceptance by our customers. We expect these service fees to have a 1 percent positive impact on revenues beginning next quarter,” he predicted.

“Regarding our additional sales and Internet initiatives, feedback from our new website launched in October has been very positive. Our new web-based e-VIP Club’s membership is growing daily, which we believe will lead to more visits from our current customers. Next month, we are implementing a major initiative to target potential customers who live within one mile of a Monro store but have not visited.”

Gross noted that “we believe we are well on our way to achieving future top line growth, and our goal is to continue to outperform the industry in the coming quarters. We are comfortable with our current fourth quarter and full year projections of 15 cents and $1.09, respectively, and expect full-year FY02 earnings to grow 10 to 15 percent.”