Monro Muffler Brake Comments On Third Quarter Results
22 December 1998
Monro Muffler Brake Comments On Third Quarter Results
ROCHESTER, N.Y.--Dec. 21, 1998--Monro Muffler Brake, Inc. announced today that based on current sales trends, the Company expects to report sales for the fiscal 1999 third quarter ending December 31, 1998 in the range of approximately $53.8 million to $54.1 million.
This compares with sales for the fiscal 1998 third quarter of $36.3 million. The Company expects to report a net loss for the period in the range of $0.8 million to $0.9 million, or $0.10 to $0.11 per diluted share. Net income for the prior-year period was $1.7 million, or $0.19 per diluted share, adjusted for a 5% stock dividend. For the fiscal 1999 third quarter, comparable store sales for locations opened before April 1, 1997 are expected to be slightly below last year.
The Company attributed the results primarily to a weaker run rate in comparable store sales at the acquired 189 Speedy U.S.A. locations prior to the consummation of the transaction in September 1998. Since completion of the transaction, Monro has made substantial progress in improving the top-line performance of the acquired locations, but not to the extent previously anticipated. The conversion of the Speedy stores to Monro also impacted the performance of these locations. This process involved the training of employees, installation of effective point-of-sale systems, signage, and significant inventory changes in terms of level, quality and mix. To a lesser extent, results were also affected by a modest decline in comparable store sales at the Company s Monro stores due to softness in demand during November that was slightly offset by improved comparable store sales results in December.
Jack Gallagher, interim President and Chief Executive Officer, commented, "While our scheduled time frame to reverse the comparable store sales decline at the Speedy locations proved overly optimistic, since September we have made considerable progress in improving their performance. We are now benefiting from centralized parts distribution in terms of cost containment and the reduction of expensive outside purchases, as well as from the retention of over 95% of our Speedy store managers. The conversion process, which was completed on schedule in early December, is one of a number of projects essential to effectively integrate the acquired Speedy locations and improve their performance.
"These top-line issues at Speedy, however, will most likely continue to impact our performance for the fourth quarter and will result in a loss similar to that anticipated for the third quarter," continued Mr. Gallagher. "Nonetheless, we will remain solidly profitable for the year and are confident that with the integration issues largely behind us by the close of the current fiscal year, the performance of the acquired operations will improve substantially in fiscal year 2000."
Mr. Gallagher concluded, "The results for the quarter were primarily due to short-term issues related to the Speedy U.S.A. acquisition more than to negative business trends or other fundamental concerns. We remain enthusiastic about the Speedy acquisition which increased our store base by 40% and has enabled us to establish critical mass in our core geographic markets and realize immediate synergies and economies in all expenses, particularly in advertising and distribution. We have also begun to roll out long-term initiatives to improve margins and overall operating performance. Additionally, we will expand and enhance the product and service offerings at the acquired locations. We have already added transmission and cooling system flush-and-fill equipment to all Speedy locations and will be performing these high-margin services in January. These actions, coupled with our real-estate market fill-in strategy, give us confidence that the Company will be on track in the coming year."
The Company expects to announce its results for the third quarter on January 21, 1999.
Monro Muffler Brake operates a chain of stores providing automotive undercar repair services in the United States. The Company currently operates 532 stores and has 14 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. Monro's stores provide a full range of services for exhaust systems, brake systems, steering and suspension systems and many vehicle maintenance services.
Certain statements made above may be forward-looking and are made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve uncertainties which may cause the Company's actual results in future periods to differ materially from those expressed. These uncertainties include, but are not necessarily limited to, uncertainties affecting retail generally (such as consumer confidence and demand for auto repair); risks relating to leverage and debt service (including sensitivity to fluctuations in interest rates); dependence on, and competition within, the primary markets in which the Company's stores are located; the need for, and costs associated with, store renovations and other capital expenditures; and the risks described from time to time in the Company's SEC reports which include the report on Form 10K for the fiscal year ended March 31, 1998.