Monro(MNRO)2025-05-28 13:30Financial Data and Key Metrics Changes - Sales decreased by 4.9% to $295 million in Q4, primarily due to six fewer selling days compared to the previous year, resulting in a sales decrease of $18.9 million [22] - Comparable store sales increased by 2.8% but decreased by 3.6% when unadjusted for days [22] - Net loss was $21.3 million compared to net income of $3.7 million in the same period last year, with diluted loss per share at $0.72 compared to diluted earnings per share of $0.12 [25] Business Line Data and Key Metrics Changes - Tire units were up mid-single digits in Q4, driven by growth in units above 10% during March [22] - Gross margin decreased by 250 basis points year-over-year, primarily due to higher material costs and increased technician labor costs [23] Market Data and Key Metrics Changes - The average vehicle life of cars on the road is over 12.5 years, with vehicle miles traveled returning to pre-COVID levels [8] - The company gained tire market share in higher margin tiers during the quarter [22] Company Strategy and Development Direction - The company plans to close 145 underperforming stores, which generated approximately 5% of total sales in fiscal 2025, to improve profitability [11] - Focus areas for improvement include enhancing customer experience, driving profitable customer acquisition, and increasing merchandising productivity [10] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to execute the performance improvement plan and capitalize on positive industry trends [19] - The company expects to see year-over-year comparable store sales growth in fiscal 2026, driven by the improvement plan [27] Other Important Information - The company generated $132 million in cash from operations during fiscal 2025, maintaining a strong financial position [26] - The company expects to incur store closure costs of approximately $10 million to $15 million primarily during the first quarter of fiscal 2026 [28] Q&A Session Summary Question: Can you provide details on the gross margins and the impact of self-funded promotions? - Management indicated that self-funded promotions, including tire promotions, have been consistent and are expected to keep gross margins pressured due to baseline cost increases and potential tariff impacts [36][37] Question: What is the strategy for customer acquisition and improving the Monro experience? - Management is reallocating marketing investments towards targeting repeat customers who appreciate a range of services, aiming to attract higher value customers [39][40] Question: Can you break down the decline in gross margin in more detail? - The decline was attributed to 160 basis points related to material costs and 80 basis points due to technician labor costs, with some deleverage on fixed occupancy costs [47] Question: What are the dynamics between traffic and ticket in the quarter? - Store traffic was down low single digits while ticket was up mid-single digits, indicating a positive trend in recent months [50] Question: What is the common denominator for the store closures? - The closures are spaced throughout the network, focusing on stores that are unlikely to meet the desired earnings profile [57]