Monro(US:MNRO)2024-01-24 15:35Financial Data and Key Metrics Changes - Sales decreased 5.2% year-over-year to $317.7 million in the third quarter, primarily due to lower tire unit sales [35] - Comparable store sales declined approximately 6% from the prior year period [31] - Net income was approximately $12.2 million compared to $13 million in the same period last year [3] - Diluted earnings per share was $0.38 compared to $0.41 for the same period last year, with adjusted diluted earnings per share at $0.39 compared to $0.43 in the third quarter of fiscal 2023 [37] Business Line Data and Key Metrics Changes - Tire units were down approximately 14%, while average ticket price increased by 5% [51][69] - Comparable store sales in the 300 small or underperforming stores were consistent with the overall comp in the quarter [31] - Gross margin increased 170 basis points compared to the prior year, primarily due to lower material costs and technician labor costs as a percentage of sales [56] Market Data and Key Metrics Changes - The tire market experienced a mid-single-digit decline in units across the industry [9] - Preliminary January month-to-date sales were down 6%, but comps accelerated materially in the last two weeks with the return of normal seasonal weather [32][42] Company Strategy and Development Direction - The company aims to improve sales, expand margins, and create cash while focusing on enhancing the customer experience and optimizing inventory [33][40] - Plans to deliver an improvement in diluted earnings per share this fiscal year despite consumer-related headwinds [30] - The company is focused on maintaining a balanced approach between tire and service categories with competitive pricing [33] Management's Comments on Operating Environment and Future Outlook - Management noted a tough macroeconomic environment with consumer deferrals of tire purchases impacting sales [51] - The company expects lower year-over-year full-year sales but anticipates improvements in gross margin through pricing actions and tire mix optimization [39] - Management expressed confidence in restoring gross margins back to pre-COVID levels with double-digit operating margins over the long term [55] Other Important Information - Total operating expenses were $91.3 million, or 28.7% of sales, compared to $89.6 million, or 26.7% of sales in the prior year period [36] - The company generated $130 million of cash from operations during the first nine months of fiscal 2024 [38] - Share repurchases amounted to approximately $44 million under the share repurchase program [59] Q&A Session Summary Question: Can you provide more detail on the labor cost reduction? - Management indicated that labor hours were reduced, contributing to a 40 basis points benefit, and emphasized the importance of managing non-productive payroll [10][65] Question: What are the trends in comparable store sales? - Management noted that the first half of January was challenging, but sales improved significantly in the second half due to favorable weather [41][42] Question: How did the underperforming stores perform? - Performance was variable, with one-third of the 300 underperforming stores being extremely successful, one-third meeting expectations, and one-third falling short [105]