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Monro Muffler Brake Inc. reported an increase in sales for the third quarter but fell short of Street earnings estimates, a result of consumers delaying purchases and spending less on maintenance and repair.
Net income for the third quarter decreased nearly 17 percent to $11.3 million, or 35 cents a diluted share, from $13.6 million, or 42 cents, in the third quarter last year. Sales for the quarter ended Dec. 29 increased nearly 8 percent to $190.4 million, compared with $176.7 million a year earlier.
Analysts had expected diluted earnings per share of 36 cents on sales of $187.53 million.
Comparable store sales—or sales at stores open at least one year—fell nearly 5 percent in the third quarter, compared with a 1.3 percent decrease in the same period last year. Comparable store sales were down in most major categories, including tires and alignments.
“The challenging economic environment continues to weigh heavily on our customers and the weather did not provide the tailwind we had anticipated in the third quarter, with the exception of the last two weeks of December, during which our markets received significant snowfall and comparable store sales increased 10 percent,” Monro president and CEO John Van Heel said in a statement.
“Our ability to take advantage of increased acquisition opportunities in this tough sales environment is demonstrated by our acquisitions in fiscal 2013 of 139 stores and approximately $200 million in incremental annualized sales, or 29 percent growth, over fiscal 2012.”
In November and December, Monro completed four acquisitions, adding 79 stores and $138 million in annualized sales. The company’s acquisitions included 31 Tire Barn stores in Indiana, Illinois and Tennessee. Monro also purchased 27 Towery’s Tire and Auto Care stores in Kentucky and 12 Enger Tire stores in northern Ohio. The company also purchases nine Tire King stores in North Carolina.
For the nine-month period, net sales increased more than 4 percent to $536.1 million from $514.8 million for the same period last year. Comparable store sales fell nearly 6 percent. Net income for the first nine months decreased nearly 22 percent to $34.4 million, or $1.07 a diluted share, compared with net income of $44.1 million, or $1.37 a diluted share.
For the fourth quarter, the company expects a decrease in comparable store sales of 6 percent to 9 percent, with diluted earnings per share of 20 cents to 25 cents, compared with 33 cents a diluted share in the fourth quarter a year ago.
For the full year, Monro anticipates comparable store sales decreases of 5.5 percent to 6.5 percent, with diluted earnings per share of $1.27 to $1.32, compared with $1.69 diluted earnings per share last year.
“Our long-term outlook for the industry and company is very positive, though near-term, visibility remains cloudy and we expect trends will continue to be choppy in our geographic regions as the economic environment weighs on consumer purchasing behavior,” Van Heel said.
“We are focused on driving top-line growth and leverage through acquisitions and aggressively reducing costs.”
The number and age of vehicles in service and the consolidation of the automotive repair market will have a positive impact on business, Van Heel added.
Shares of company stock (Nasdaq: MNRO) took a hit in midday trading Tuesday, falling nearly 3 percent to $35.68.
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