MNRO

Image source: The Motley Fool. Wednesday, July 29, 2026 at 8:30 a.m. ET President and Chief Executive Officer - Peter D. Fitzsimmons vice president of investor relations - Felix Veksler Operator: Welcome to Monro, Inc. Earnings Conference Call. For the First Quarter of Fiscal 2027. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session, and instructions will follow at that time. If anyone should require assistance during the call, please press 0 on your touch-tone phone. As a reminder, this conference call is being recorded and may not be reproduced in whole or in part without permission from the company. I would now like to introduce Felix Veksler, vice president of investor relations at Monro. Please go ahead. Felix Veksler: Thank you. Hello, everyone, and thank you for joining on this morning's call. Before we get started, note that as part of this call, we will be referencing a presentation that is available on the Investors section of our website at corporate.monro.com/investors. If I could draw your attention to the safe harbor statement on Slide 2, I would like to remind participants that our presentation includes some forward-looking statements about Monro's future performance. Actual results may differ materially from those suggested by our comments today. The most significant factors that could affect future results are outlined in Monro's filings with the SEC and in our earnings release. The company disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise, except as required by law. Additionally, on today's call, management statements include a discussion of certain non-GAAP financial measures, which are intended to supplement and not be substitutes for comparable GAAP measures. Reconciliations of such supplemental information to the comparable GAAP measures are included as part of today's presentation and in our earnings release. With that, I would like to turn the call over to Monro's President and Chief Executive Officer, Peter D. Fitzsimmons. Peter D. Fitzsimmons: Thank you, Felix, and thanks to everyone for joining us. Great to be with you today. This morning, I would like to start by acknowledging that this was a difficult fiscal first quarter for Monro. The operating environment was challenging under the backdrop of extended geopolitical tensions in The Middle East, leading to higher oil prices, which impacted customer spending and traffic across our store network. We are not satisfied with these results, and delivering improved performance is our top priority. That said, I want to be clear about what we are seeing beneath the surface. While the macro pressures on the consumer are real and significant, the operational improvements we have been implementing are gaining traction. We are building capabilities that are fundamentally changing how we serve customers, how we deploy our resources, and how we manage our business. These are structural improvements that position us to capture market share and drive profitability as conditions normalize. Since completing our store closure program over a year ago, we have been laser-focused on the 3 remaining performance improvement initiatives which are driving profitable customer acquisition and activation, improving our store-based customer experience and selling effectiveness, and increasing merchandising productivity, including mitigating the impacts of trade and supply disruptions. Each of these initiatives showed measurable progress during the quarter. Even as the top-line environment remained under pressure. We are making the right investments, building the right capabilities, and positioning Monro to emerge stronger when consumer spending stabilizes. We believe that the work we are doing now is further solidifying the foundation for sustainable, profitable growth. In a moment, I will walk you through the specific progress we have made in each of these 3 areas. Then I will provide some context on our first quarter results and what we are seeing in the current environment as we execute our performance improvement plan to enhance operations, drive profitability and increase total shareholder returns. Let's start with driving customer acquisition and activation on slide 3. During the first quarter, we continued to strengthen our marketing capabilities by refining how we allocate media, customer outreach, and promotional investments across our store network. We are increasingly tailoring our approach to the needs of individual markets, allowing us to deploy our marketing investments more effectively, while supporting both guest acquisition and customer retention. Within our CRM platform, we continue to enhance our AI and machine learning capabilities to help determine the most relevant timing, messaging, and promotional offers to our existing customers. These ongoing refinements have improved the efficiency of our customer outreach and contributed to stronger campaign response rates. We also continued to evolve our promotional strategy through the expansion of specific marketing offers to the consumer to drive incremental traffic. One focus in the first quarter was the enhanced use of our CRM to drive incremental traffic of existing customers through specific offers for high-volume services including oil changes and tire replacements. With regards to our digital marketing investment, we also expanded the use of pay-per-click to drive traffic in districts and regions where our analysis indicated that potential customers had an in-market need for some of our products and services. We also worked in close collaboration with our tire vendors, on the development of promotional programs to meet specific customer needs in all tire tiers given the current environment. Collectively, these efforts are helping us deliver more relevant value to our guests, while strengthening the data and capabilities that support more informed marketing decisions. They also provide greater insight into where and how our marketing investments can have the greatest impact. On previous earnings calls, many of you have heard us talk about optimizing our marketing spend. During the spring, we continued to refine our process, and as a result, have redirected advertising dollars to customer profiles in different regions of our store network to address both near and longer-term business needs. Our goals are to ensure that we get the most out of our marketing spend by giving certain types of customers the motivation to visit us now which we believe will allow us to add incremental sales. Now let's discuss the things we are doing to improve the customer experience and selling effectiveness in our stores. Our ConfiDrive inspection tool remains the cornerstone of our customer experience transformation. With each quarter, our team becomes increasingly skilled at conducting them more efficiently and presenting the results of our findings so that our customers can better understand their vehicle needs. We also intensified our training efforts with technicians to guarantee both the completion and accuracy of these critical inspections. Our goal is to help our guests identify and prioritize what they need to do to keep their vehicles safe. Our ConfiDrive process is designed to build trust with our customers through a quality diagnostic supported with pictures to truly show areas that require attention. Safety, trust, and confidence on the road are what we want to deliver for our customers. This transparency is not just about building trust. It is about fundamentally changing how customers perceive automotive. When customers can understand exactly what we are seeing through detailed visual documentation, it eliminates the skepticism that has historically plagued our industry. Additionally, on our previous earnings call in May, we talked about the recent rollout of our enhanced district manager toolkit. Which has enabled us to address suboptimal operating performance through a focus on gross margin opportunities at about 150 underperforming locations. Utilizing both the results as well as our learnings from the first 100 stores, we have now expanded the rollout of this toolkit to approximately 340 locations and broadened our scope from gross margins to overall store profit improvement opportunities. We continue to be encouraged by the profit improvement we have seen in some of these store locations. We expect this process to improve store profitability across the network, as we roll this initiative out further. Now let's turn to merchandising including mitigating the impacts of trade and supply disruptions. After the reset of our tire assortment in the fourth quarter of fiscal 2026, with the support of our vendors, we delivered a more attractive assortment to the consumer in the current environment. We succeeded in 2 important ways. In the first quarter, we believe that our updated tire assortment in Tier 1 helped us gain market share versus the industry in this higher-margin tier. This comes at a time when some consumers also migrated to lower-tier tire products. And in Tier 4, we believe that our decision to add an opening price point tire enabled us to provide our most price-conscious customers with a better set of options. As it relates to parts and service, we saw year-over-year comparable store sales growth in batteries, alignments, and front-end shops. While the use of our ConfiDrive inspection tool certainly helped us to better educate our customers on their vehicle needs, we believe the improvements we have implemented in both our in-store stocking programs as well as our front-of-shop presentation enabled us to drive 8% growth in our battery comps in the quarter. And as it relates to trade, our supply has been largely uninterrupted by the extended geopolitical tensions in The Middle East at least so far. We continue to partner with our vendors to understand and manage costs in what continues to be a dynamic environment. We expect to continue to strike the right balance between potential pricing adjustments to protect gross margins, while also remaining competitive and delivering value to our customers. Now let me briefly touch on our fiscal first quarter results. Which Brian will cover in more specific detail in just a few moments. Turning to slide 4 of our presentation materials, our first quarter comparable store sales declined 1.7%. This reflects an operating environment which continued to challenge the full-service auto aftermarket during the quarter. Our comp store sales decline was driven by lower store traffic as well as consumers that continued to defer higher-ticket spending decisions in tires and brakes, and traded down to lower-cost alternatives in our tire category. However, and importantly, in an environment where traffic was down and consumers were cautious, we were able to hold our tire unit volumes flat and we believe this allowed us to take market share both in our Tier 1 tires as well as in our overall tire category. We believe that this is a direct result of our promotional effectiveness and the timely expansion of our Tier 4 tire offerings, which allowed us to meet the needs of our customers across the price spectrum. And while traffic and sales were under pressure, the effectiveness of our ConfiDrive courtesy inspection process helped us drive average repair order growth in this quarter. This was driven by meaningful improvements in certain of our higher-margin service categories, including batteries, alignments, and front-end shocks, This performance reinforces that we continue to deliver genuine value to our full-service customers. We are not just a tire shop. We are a comprehensive vehicle service provider and customers are responding to our value proposition. Even in a difficult spending environment. Importantly, we maintained our marketing investment during the quarter. Despite the sales headwinds we faced. When traffic is down and sales are under pressure, there is an obvious temptation to pull back on marketing spend to protect margins in the short-term. We deliberately chose not to do that. We continued investing in customer acquisition, in CRM campaigns, in promotional programs, and in building our marketing capabilities. Here's our reasoning. The capabilities we are building in marketing and customer acquisition are critical to our long-term growth trajectory. The market share opportunities in front of us require sustained investment and consistent presence in the market. If we pull back when conditions are challenging, we risk losing momentum in customer acquisition, we risk ceding market share to competitors who maintain their investment, and we risk undermining the progress we have made in building a more sophisticated marketing engine. We are playing a longer game here. And that requires maintaining investment even when the immediate returns are pressured by macro headwinds. And while our preliminary July comp store sales are down approximately 1%, as certain consumers continue to feel increased pocketbook pressure as a result of recent increases in gas prices as well as other related costs. We believe that the operational progress we have made is building the foundation for improved performance as consumer spending stabilizes. We are not satisfied with where we are. But we remain confident in the direction we are heading and the capabilities we are building to get there. Before I hand the call over to Brian, I would like to take a moment to once again thank all of our teammates for their commitment to meeting the service needs of our customers. Across our 1,110 stores in 32 states. And for their dedication to achieving our business objectives. With that, I will now turn it over to Brian, who will provide an overview of Monro's first quarter performance, financial position and additional color regarding the remainder of 2027. Brian? Brian J. D'Ambrosia: Thank you, Peter, and good morning, everyone. Turning to slide 5. Sales decreased 4.6% to $287.1 million in the first quarter. This was primarily driven by a reduction in sales of $9.0 million from the closure of 145 underperforming stores in the first quarter of fiscal 2026, as well as a 1.7% decrease in comparable store sales from continuing store locations. For reference, comp sales were up 1% in April, down 2% in May, and we exited the quarter down 3% in June. While our tire category sales were down 1%, we were able to hold our tire unit volume flat in the quarter. Gross margin decreased 50 basis points compared to the prior year. This primarily resulted from higher occupancy costs as a percentage of sales, which were partially offset by lower technician labor costs as a percentage of sales. Total operating expenses were $96.7 million or 33.7% of sales as compared to $113.0 million or 37.5% of sales in the prior year period. The decrease was primarily driven by $17.8 million of lower store closing costs in the first quarter of fiscal 2027, $4.1 million of lower costs from the closure of 145 underperforming stores in the first quarter of fiscal 2026. And $3.7 million of lower costs incurred in connection with consultants related to our operational improvement plan. These were partially offset by $4.9 million of increased marketing costs to support our top-line and $4.6 million of increased costs at continuing locations primarily front-shop labor. Operating income for the first quarter was $3.7 million or 1.3% of sales. This compares to an operating loss of $6.1 million or negative 2% of sales in the prior year period. Adjusted operating income, a non-GAAP measure, for the first quarter was $2.2 million or 0.8% of sales. As compared to adjusted operating income of $14.0 million or 4.7% of sales in the prior year period. Net interest expense decreased to $4.6 million as compared to $4.8 million in the same period last year. This was principally due to lower weighted average debt which was driven by a decrease in finance lease obligations related to our stores. Income tax expense was $200,000, an effective tax rate of -7.7%, which is compared to an income tax benefit of $2.7 million or an effective tax rate of 24.8% in the prior year period. The year-over-year difference in effective tax rate is primarily related to a decrease in unrecognized tax benefits as well as the impact from other adjustments, none of which are significant on the change in pretax loss. Net loss was $2.1 million as compared to net loss of $8.1 million in the same period last year. Diluted loss per share was $0.08. This is compared to diluted loss per share of $0.28 for the same period last year. Adjusted diluted loss per share, a non-GAAP measure, was $0.09. This is compared to adjusted diluted earnings per share of $0.22 in the first quarter of fiscal 2026. Please refer to our reconciliation of adjusted operating income, adjusted net loss and income, and adjusted diluted loss and earnings per share in this morning's earnings press release and on Slides 9, 10, and 11. In the appendix to our earnings presentation. For further details regarding excluded items in the first quarter of both fiscal years. Turning to slide 6. Our AP-to-inventory ratio was 185% at the end of the first quarter, versus 202% at the end of fiscal 2026. Our cash used for operating activities of $30 million was largely driven by timing of payments that caused accounts payable and accrued expenses to be a use of cash in the quarter. We invested $8 million in capital expenditures, spent $9 million in principal payments for financing leases, and distributed $9 million in dividends. As it relates to our closed-store real estate dispositions, we have continued our process to exit the real estate at these locations. During the first quarter, we successfully exited a total of six leases and sold four owned locations. This resulted in cumulative proceeds of $3 million. This leaves us with a remaining balance of 37 stores that have the potential to be monetized during the next several quarters. At the end of the first quarter, we had net bank debt of $99 million, availability under our credit facility of approximately $261 million and cash and equivalents of approximately $10 million. Now turning to our expectations for the full year of fiscal 2027 on Slide 7. We expect to deliver year-over-year comparable store sales growth in fiscal 2027, primarily driven by our performance improvement initiatives. The results of our store optimization plan, reduced total sales by $9.0 million in the first quarter of fiscal 2027. Given continued cost inflation, we expect that our gross margin for the full year of fiscal 2027 will be consistent with fiscal 2026. We expect higher selling, general, and administrative expenses as we invest in additional marketing to support top-line growth. We expect to fund our capital allocation priorities during fiscal 2027. Regarding our capital expenditures, we expect to spend $25 million to $35 million. With that, I will now turn the call back over to Peter for some closing remarks. Peter D. Fitzsimmons: Thanks, Brian. Through our national retail network, economies of scale, and durable business model, we continue to believe that we can provide our customers with the services they need and generate meaningful value for our shareholders. We also remain confident that the marketing, store performance, and merchandising initiatives that we activated a year ago will make Monro the preferred national full-service provider in the automotive aftermarket. Before we turn to Q&A, I would like to take a moment to provide a brief update on the review of strategic alternatives that we announced last quarter. The board is working diligently alongside its independent financial advisors Bank of America and Solomon Partners. And its legal advisors to consider and evaluate a full range of potential opportunities, including but not limited to asset sales, refinancing of the business, strategic acquisitions and operational improvements, and a sale of the company. That work is well underway. And as you have heard today, we remain focused on delivering service excellence to our customers while we explore all options to maximize shareholder value. I would reiterate that there is no deadline or definitive timeline set for the completion of this strategic review. And there can be no assurance that the review will result in any particular transaction or other strategic outcome. As such, we do not intend to make any further public comments on the process unless and until we determine that further disclosure is appropriate or necessary. And we would ask you to please keep today's questions focused on the financial results we shared today. With that, I will turn it over to the operator for questions. Operator: Thank you. To ask a question, please press *1 on your telephone keypad. To withdraw your question, please press *1 again. In the interest of time, we ask that you please limit yourself to one question and one or two follow-up questions. Thank you. Our first question comes from Thomas Wendler with Stephens. Thomas Wendler: Hey, good morning, everyone. Happy to see the stabilizing tire trends, especially kind of what I have been hearing with the industry. You know, you have highlighted the benefits from the change of assortment, in Tier 1 and tier 4. Could you maybe dig a little deeper into the, the marketing front, the benefits you have seen there, and, and what is kind of working for you right now on tire volume sales? Peter D. Fitzsimmons: Hi, Tom. it is Peter. Thanks for the question. I think that the continued combination of digital marketing, which is new customer acquisition oriented, and a use of the focus on tires, primarily with pay-per-click which only results in a cost to us if a customer is in the market for tires. Together with the assortment and the way we present it in the stores, has really helped us, with acquiring new customers for tires. As it relates to CRM, which is more focused on the existing customer base, we have worked on specific offers not only in tires, but also in oil. To drive incremental traffic back to the stores from folks who have already visited us. So I think it is the combination of both digital and CRM that has helped us maximize the performance on tires at a time that the industry has not done particularly well. Thomas Wendler: Perfect. Thanks for that. And then for my second question, could you maybe walk us through the drivers of the -1.2% comp in July? Are there any callouts by product or service we should be thinking about? Peter D. Fitzsimmons: No. I do not think that there is anything in particular I think the consumer continues to feel pressured by high gas prices, by high food prices, by healthcare. We have talked about this before, but even though what we offer is a non-discretionary product and service, you gotta make a choice about how you are gonna spend the dollars that are available to you. It is not true of all of our customers, but it is true of a significant number of them. And I think more than anything, it is that current environment condition that affected our comps in the month that just ended. I do think that all of the things we have talked about and I wanna reiterate it is a combination of marketing, of improving our customer experience in the store, and our merchandising assortment, those things collectively are gonna continue to make us the type of full-service automotive provider that we wanna be. And that I think our customers are attracted to. Thomas Wendler: Perfect. I appreciate all the color, guys. Peter D. Fitzsimmons: Sure. Thanks, Tom. Operator: Our next question comes from Brian Nagel with Oppenheimer. Please go ahead. Your line is open. Brian Nagel: Hey, guys. Good morning. Peter D. Fitzsimmons: Hey, Brian. Brian Nagel: So the question I wanna ask, look. I mean, it is no secret that you know, high gas prices have impacted spending broadly, particularly in your in the auto category. But I guess the way I wanna ask the question, we have seen oil prices or gas prices bouncing around a lot. Over the last few months. So as you look at your business, again, I know this is short-term focus, but you know, just to try to parse out whether, you know, extent to which these oil prices are impacting your business, versus maybe something else? When oil prices moderate, do you see an uptick? Do you see consumers return? Peter D. Fitzsimmons: Absolutely. Where you see it affecting our business is in deferral of high-ticket investment, mainly tires, but also brakes. We did not perform as well in brakes in the most recent quarter. Because that is a higher-ticket item. And it is the sort of thing that you can defer if you do not have to do it. So even though our inspection tool might suggest to a customer that would be something they would wanna give attention to, they do not have to do it immediately. And it is the pocketbook pressure that I think has affected that. With tires, what has happened is the customer has moved towards buying fewer tires per transaction. And even though we continue to do well in Tier 1, where the customer is not as price-sensitive. In tier 2, 3, and 4, they are thinking a little harder about which tire they are going to buy. And so those 2 things collectively, I think, impacted where our sales ended up in the most recent months. Brian Nagel: That is helpful, Peter. So I guess my follow-up question to that. You know, assuming again, it is hard to say what is gonna happen. Assuming that oil prices do stay elevated frankly, could climb from here, you know, are there as you look you know, going forward, are there are there levers that you can pull? You know? And, obviously, you are already doing a lot to, you know, enhance the business, enhance those consumer touch points. But are there are there levers you can pull to sort of help offset that dynamic? Peter D. Fitzsimmons: Yeah. We can continue to optimize marketing. We can look where in our network we need to invest a little bit more. In driving traffic into the stores. And so that is something that having been at this marketing approach for the last year, we have much better information that enables us to target marketing. We have seen it help us. I will give you an example. In South Florida, we invested in incremental pay-per-click and changed the offer price of certain oil products and we saw a significant increase in units there. You do not see it everywhere, but we have the ability to direct our marketing investment to places that we feel will benefit from it the most. Brian Nagel: And so one other question, if I could squeeze one more in a different topic. So, you know, you as a company, you continue to reiterate, I forget the exact language, but, you know, your intention to maintain your capital priorities. How should we think as we are watching, you know, as we are watching Monro and through this repositioning and given the muted results, how should we think about, say, the prioritization around funding or the dividend? Brian J. D'Ambrosia: Yes, Brian. This is Brian. Thanks for the question. So we have, as we said, the intention and expectation to fund our historical capital allocation priorities and that includes the dividend. But as has historically been the practice and what will continue to be the practice is that is a quarterly review, a review done by management and the board taking into account everything, cash flows, current performance, projected performance, compliance with covenant requirements in the credit facility. And then we make a determination about the dividend, in that quarter. That is how the process has been. That is how it will continue to be, and we will take into account all those data points in making those decisions. Brian Nagel: That is helpful. I appreciate it. Thank you. Peter D. Fitzsimmons: Yep. Thanks, Brian. Operator: Our next question comes from David Lantz with Wells Fargo. Please go ahead. Your line is open. David Lantz: Good morning, guys, and thanks for taking my questions. Within the 50 basis points of gross margin decline in the quarter, curious if you can talk about the buckets in a little more detail across D&O, material costs and technician labor. And then as you guide for flat for the year, curious if you can talk about the glide path in a little bit more detail from Q2 to Q4 as well? Brian J. D'Ambrosia: Yes, absolutely. Thanks, David. So as it relates to the 50 basis point decline in the quarter, occupancy costs increased as a percentage of sales by about 90 basis points. that is really reflective of deleverage of those largely fixed costs on the lower comparable store sales levels. Offsetting that or partially offsetting that was technician labor costs that were lower by 40 basis points as a percentage of sales. And then with material costs flat year-over-year, that gets you to your 50-basis point decline in gross profit year-over-year. As it relates to the go-forward, I think it is really the improvement that we expect to see in comparable store sales to deliver positive comps for the full year really underpin what we call our call on consistent gross margin year-over-year. Peter D. Fitzsimmons: That is because we expect with higher sales, we will get better leverage and better fixed cost leverage on the occupancy costs and to a certain extent, technician labor costs. And that will be the difference between being short of prior year and, you know, being higher than prior year as we move into the back half of the year, enabling us to deliver the consistent full-year gross margin number. Brian J. D'Ambrosia: I would add one more thing. Peter D. Fitzsimmons: As it relates to tires, I really believe in our assortment. And I think what we have seen is a move to tier 4 tires industrywide. When we see a shift back and there is a little bit of evidence in the last month or two that there has been a shift back, we should get a boost in our tire margin. We work very hard to manage our material costs, our material costs are well in line with where we want it to be. And with incremental volumes of Tier 1, 2, and 3 tires, we are going to increase the gross margin rate. David Lantz: Got it. That is helpful. And then on SG&A, so that step-- you know, adjusted SG&A dollar stepped up a little over $5 million year-over-year. Curious if we can talk about, I know you are guiding for higher year-over-year for the full year, and marketing investments will start to lap in the second half, but curious if we can talk about the glide path there for Q2 to Q4 as well. Brian J. D'Ambrosia: Yeah. To your point, Q2 is going to be the most year-over-year continued pressure similar maybe not to the full order of magnitude that we saw in Q1, but similar to Q1 and Q2. Driven by the increase in marketing costs year-over-year. We will lap that in Q3, and see operating expenses come in more in line with, prior year as we get into Q3 and then into Q4. David Lantz: That is helpful. And then just last one for me. Within that, you know, down 1.7% comp for the quarter, can you break out traffic and ticket? And any commentary there on quarter-to-date as well? Brian J. D'Ambrosia: Yeah. The comp was up about low- to mid-single digits in traffic. I am sorry, in ticket. Peter D. Fitzsimmons: So up about 4% in ticket. And down, mid-single digits in traffic. David Lantz: Thank you. Brian J. D'Ambrosia: Rob. Operator: Thank you. Our last question comes from Bret Jordan with Jefferies. Bret Jordan: On the working capital, On the AP-to-inventory, I guess, that was, it said, 185 versus whatever you said, 202%. Just given, I think, what was sort of your guide to a lower EBIT margin and the leverage ratio a bit over 3, I guess, in a trailing 12-month basis. Is there any pressure on the factoring program? I mean, is there any bias to, you know, funding more inventory, you know, just given the factoring costs go up with leverage. Brian J. D'Ambrosia: Yeah. We have seen, you know, in the supply chain program, really good support from the bank group. We have had some turnover of funding sources, but still able to fully fund the program and, you know, obviously, great participation from our vendors as well. So nothing to really report on the factoring program. The working capital deficit was really driven by timing, as we said, of payments. Part of that was in accounts payable where we just had some amounts coming due on the factoring program from the prior year purchases, which were elevated as we know, relative to this year's purchases, which we know have come down. And so that just caused a little bit of a cash outflow in the current year and then some timing of insurance payments and payroll at the end of the quarter relative to the prior quarter, as our pay cycles kind of shift because of the odd number of weeks in the quarter. So all of that, we expect to largely kind of retrace over the next couple quarters and do not expect working capital to be a significant use of cash for the full year. Bret Jordan: Okay. And what is the risk spread above SOFR on that factoring program? Brian J. D'Ambrosia: It is all negotiated between the vendor and the bank. The company does not have any input into the rate at which that is negotiated. Our current borrowing rate increment in our revolver is SOFR plus 25 basis points. Bret Jordan: So that is obviously a benchmark that some of those conversations between the vendor and the bank start at. Yeah. Great. Thank you. Brian J. D'Ambrosia: You are welcome. Operator: We have no further questions. I would like to turn the call back over to Mr. Peter D. Fitzsimmons for any closing remarks. Peter D. Fitzsimmons: Well, thanks again, everyone, for joining today. We are pleased with the progress Monro has made, and we are optimistic about the opportunities in front of us. I am confident that the company is well positioned to capitalize on the operating improvements we have put in place in the last 12 months. I look forward to keeping you updated on our progress in the quarters to come. Have a great day. Operator: Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect. Before you buy stock in Monro, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Monro wasn’t one of them. The 10 stocks that made the cut are built for long-term growth and could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $397,405!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,344,091!* That performance is why people listen. With a track record of beating the S&P 500 by 4x, Stock Advisor offers a distinct advantage. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built for the long haul. See the 10 stocks » *Stock Advisor returns as of August 7, 2026. This article is a transcript of this conference call produced for The Motley Fool. While we strive for our Foolish Best, there may be errors, omissions, or inaccuracies in this transcript. As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. Monro (MNRO) Q1 2027 Earnings Call Transcript was originally published by The Motley Fool

Our analysts just identified a stock with the potential to be the next Nvidia. Tell us how you invest and we'll show you why it's our #1 pick. Tap here. Management attributed the difficult first quarter to geopolitical tensions in the Middle East driving higher oil prices, which directly pressured consumer traffic and discretionary automotive spending. The company successfully held tire unit volumes flat despite a 1.7% comparable store sales decline, driven by a strategic pivot to Tier 4 opening price point tires for cost-conscious consumers. Operational improvements are centered on the ConfiDrive inspection tool, which management credits for driving average repair order growth by building customer trust through visual diagnostic documentation. Marketing strategy has shifted toward a more granular, district-level allocation using AI and machine learning to optimize CRM timing and pay-per-click investments for in-market tire buyers. Management deliberately maintained marketing investment despite sales pressure, arguing that pulling back would risk losing long-term customer acquisition momentum and market share to competitors. Merchandising productivity improved through a tire assortment reset that allowed the company to gain market share in high-margin Tier 1 products even as some consumers traded down to lower tiers. Supply chains have remained largely uninterrupted by Middle East tensions so far, though the company continues to monitor costs and balance pricing adjustments to protect gross margins. Full-year fiscal 2027 guidance assumes positive comparable store sales growth, predicated on the continued traction of performance improvement initiatives and stabilization of consumer spending. Gross margin for the full year is expected to be consistent with fiscal 2026, assuming that higher sales volumes in the back half of the year will provide necessary leverage over fixed occupancy and labor costs. Management expects SG&A expenses to remain elevated in the near term due to sustained marketing investments, with year-over-year comparisons expected to normalize starting in the third quarter. The company anticipates capital expenditures between $25 million and $35 million for fiscal 2027 to fund its capital allocation priorities. The ongoing review of strategic alternatives, including potential asset sales or a sale of the company, has no definitive timeline and no guaranteed outcome. The closure of 145 underperforming stores in the prior year resulted in a $9.0 million reduction in total sales for the current quarter. Monro successfully exited six leases and sold four owned locations during the quarter, with 37 remaining closed stores identified for potential monetization in future periods. Preliminary July comparable store sales are down approximately 1%, reflecting continued 'pocketbook pressure' on consumers from gas and food price inflation. A shift in consumer behavior toward deferring high-ticket services like brakes was noted as a specific headwind to top-line performance during the quarter. One stock. Nvidia-level potential. 30M+ investors trust Moby to find it first. Get the pick. Tap here. Management highlighted that pay-per-click investments are now strictly focused on customers with an immediate 'in-market' need for tires, ensuring a direct link between cost and acquisition. CRM efforts are being specifically utilized to drive incremental traffic for high-frequency services like oil changes to maintain the existing customer base. Management confirmed that when gas prices moderate, they typically see an uptick in consumer return for deferred high-ticket items like tires and brakes. Current consumer pressure is manifesting as a reduction in the number of tires purchased per transaction rather than a total exit from the category. The company intends to fund historical capital priorities, including the dividend, but emphasized that this is subject to a quarterly board review of cash flows and credit facility covenants. Management noted that dividend decisions will be data-dependent based on projected performance and compliance requirements. The decline in the AP-to-inventory ratio to 185% was attributed to the timing of payments for elevated prior-year purchases and shifting payroll cycles. Management stated there is no significant pressure on the factoring program, noting continued support from the bank group despite some turnover in funding sources.

FAIRPORT, N.Y., July 29, 2026--(BUSINESS WIRE)--Monro, Inc. (Nasdaq: MNRO), a leading provider of automotive repair and tire services, today announced financial results for its first quarter ended June 27, 2026. First Quarter Results Sales for the first quarter of the fiscal year ending March 27, 2027 ("fiscal 2027") decreased 4.6% to $287.1 million, as compared to sales of $301.0 million for the first quarter of the fiscal year ended March 28, 2026 ("fiscal 2026"). This was primarily driven by a reduction in sales of $9.0 million from the closure of 145 underperforming stores in the first quarter of fiscal 2026, as well as a 1.7% decrease in comparable store sales from continuing store locations. Comparable store sales increased 8% for batteries and 1% for front end/shocks and alignments compared to the prior year period. Comparable store sales decreased 1% for tires and brakes and 5% for maintenance services compared to the prior year period. Please refer to the "Comparable Store Sales" section below for a discussion of how the Company defines comparable store sales. Gross margin decreased 50 basis points compared to the prior year period, primarily from higher occupancy costs as a percentage of sales, which were partially offset by lower technician labor costs as a percentage of sales. Total operating expenses for the first quarter of fiscal 2027 were $96.7 million, or 33.7% of sales, as compared to $113.0 million, or 37.5% of sales in the prior year period. The decrease was primarily driven by $17.8 million of lower store closing costs in the first quarter of fiscal 2027, $4.1 million of lower costs from the closure of 145 underperforming stores in the first quarter of fiscal 2026, and $3.7 million of lower costs incurred in connection with consultants related to the Company’s operational improvement plan. These were partially offset by $4.9 million of increased marketing costs to support the Company’s topline and $4.6 million of increased costs at continuing locations, primarily front shop labor. Operating income for the first quarter of fiscal 2027 was $3.7 million, or 1.3% of sales, as compared to an operating loss of $6.1 million, or -2.0% of sales in the prior year period. Adjusted operating income, a non-GAAP measure, for the first quarter of fiscal 2027 was $2.2 million, or 0.8% of sales, as compared to adjusted operating income of $14.0 million, or 4.7% of sales in the prior year period. Please refer to the reconciliation of adjusted operating income in the table below for details regarding excluded items in the first quarters of fiscal 2027 and 2026. Please refer to the "Non-GAAP Financial Measures" section below for a discussion of this non-GAAP measure. Interest expense was $4.6 million for the first quarter of fiscal 2027, as compared to $4.8 million for the first quarter of fiscal 2026, principally due to lower weighted average debt, which was driven by a decrease in finance lease obligations related to the Company’s store locations. Income tax expense in the first quarter of fiscal 2027 was $0.2 million, or an effective tax rate of -7.7%, compared to an income tax benefit of $2.7 million, or an effective tax rate of 24.8% in the prior year period. The year-over-year difference in effective tax rate is primarily related to a decrease in unrecognized tax benefits as well as the impact from other adjustments, none of which are significant, on the change in pre-tax loss. Net loss for the first quarter of fiscal 2027 was $2.1 million, as compared to a net loss of $8.1 million in the same period of the prior year. Diluted loss per share for the first quarter of fiscal 2027 was $.08. This compares to diluted loss per share of $.28 in the first quarter of fiscal 2026. Adjusted diluted loss per share, a non-GAAP measure, for the first quarter of fiscal 2027 was $.09. This compares to adjusted diluted earnings per share of $.22 in the first quarter of fiscal 2026. Please refer to the reconciliation of adjusted net (loss) income and adjusted diluted (loss) earnings per share in the tables below for details regarding excluded items in the first quarters of fiscal 2027 and 2026. Please refer to the "Non-GAAP Financial Measures" section below for a discussion of these non-GAAP measures. Monro ended the first quarter with 1,115 company-operated stores and 47 franchised locations. "Our first quarter comparable store sales declined 1.7%, reflecting an operating environment, which continued to challenge the full-service auto aftermarket. This was driven by lower store traffic as well as consumers that continued to defer higher-ticket spending decisions in tires and brakes and traded-down to lower-cost alternatives in our tire category. However, and importantly, we were able to hold our tire unit volumes flat, and we believe this allowed us to take market share, both in our tier one tires as well as in our overall tire category in the quarter. We believe that this is a direct result of our promotional effectiveness and the timely expansion of our tier four tire offerings, which allowed us to meet the needs of our customers across the price spectrum. The effectiveness of our ConfiDrive courtesy inspection process helped us drive average repair order growth in the quarter. This was driven by meaningful improvements in certain of our higher-margin service categories, including batteries, alignments, and front/end shocks. This performance reinforces that we continue to deliver genuine value to our full-service customers, even in a difficult spending environment. Importantly, we maintained our marketing investment during the quarter, despite the sales headwinds we faced," said Peter Fitzsimmons, President and Chief Executive Officer. Fitzsimmons continued, "While we’re not satisfied with our results, we remain confident that the operational progress we’ve made is building a foundation for improved performance as consumer spending stabilizes." Financial Position As of June 27, 2026, the Company had availability under its credit facility of $261.5 million and cash and equivalents of $9.5 million. First Quarter Fiscal 2027 Cash Dividend On June 16, 2026, the Company paid a cash dividend for the first quarter of fiscal 2027 of $.28 per share. Environmental, Social & Governance (ESG) Monro recently released its sixth annual ESG Report, which covers fiscal 2026. The report highlights the Company’s ESG initiatives, including ongoing commitments to operational excellence and responsible business practices as the foundation for driving growth, strengthening relationships, and delivering long-term value to stakeholders. The report is available on the Company’s corporate website at corporate.monro.com/esg/default.aspx. Company Expectations Monro is not providing fiscal 2027 financial guidance at this time but will provide perspective on its expectations for fiscal 2027 during its earnings conference call. Earnings Conference Call and Webcast The Company will host a conference call and audio webcast on July 29, 2026 at 8:30 a.m. Eastern Time. The conference call may be accessed by dialing 1-800-715-9871 and using the required access code of 4507272. A replay will be available approximately two hours after the recording through Wednesday, August 12, 2026 and can be accessed by dialing 1-800-770-2030 and using the required access code of 4507272. A replay can also be accessed via audio webcast at the Investors section of the Company’s website, located at corporate.monro.com/investors. About Monro, Inc. Monro, Inc. (NASDAQ: MNRO) is one of the nation’s leading automotive service and tire providers, delivering best-in-class auto care to communities across the country, from oil changes, tires and parts installation, to the most complex vehicle repairs. With a focus on sustainable growth, the Company generated approximately $1.2 billion in sales in fiscal 2026. Monro brings customers the professionalism and high-quality service they expect from a national retailer, with the convenience and trust of a neighborhood garage. Monro’s highly trained teammates and certified technicians bring together hands-on experience and state-of-the-art technology to diagnose and address automotive needs every day to get customers back on the road safely. For more information, please visit corporate.monro.com. Cautionary Note Regarding Forward-Looking Statements The statements contained in this press release that are not historical facts may contain statements of future expectations and other forward-looking statements made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements can be identified by such words and phrases as "continue," "expect," "may," "believe," "focus," "will," "plan," "should," "estimate," and other similar words or phrases. Forward-looking statements are subject to risks, uncertainties and other important factors that could cause actual results to differ materially from those expressed. These factors include, but are not necessarily limited to uncertainty related to the financial and operational impact of the operational improvement plan, product demand, advances in automotive technologies including adoption of electric vehicle technology, our dependence on third parties for certain inventory, dependence on and competition within the primary markets in which the Company’s stores are located, the effect of general business or economic and geopolitical conditions on the Company’s business, including consumer spending levels, inflation, and unemployment, seasonality, our ability to generate sufficient cash flows from operations and service our debt obligations and comply with the terms of our credit agreement, changes in the U.S. trade environment, including the impact of tariffs on imported products, the impact of competitive services and pricing, product development, parts supply restraints or difficulties, the impact of weather trends and natural disasters, industry regulation, risks relating to leverage and debt service (including sensitivity to fluctuations in interest rates), continued availability of capital resources and financing, risks relating to protection of customer and employee personal data, risks relating to litigation, risks relating to integration of acquired businesses and other factors set forth elsewhere herein and in the Company’s Securities and Exchange Commission filings, including the Company’s annual report on Form 10-K for the fiscal year ended March 28, 2026. Except as required by law, the Company does not undertake and specifically disclaims any obligation to update any forward-looking statement to reflect the occurrence of anticipated or unanticipated events or circumstances after the date of such statements. Non-GAAP Financial Measures In addition to reporting operating income (loss), net loss, and diluted loss per share, which are generally accepted accounting principles ("GAAP") measures, this press release includes adjusted operating income, adjusted net (loss) income, and adjusted diluted (loss) earnings per share, which are non-GAAP financial measures. The Company has included reconciliations from adjusted operating income, adjusted net (loss) income, and adjusted diluted (loss) earnings per share to their most directly comparable GAAP measures, operating income (loss), net loss, and diluted loss per share. Management views these non-GAAP financial measures as a way to better assess comparability between periods because management believes the non-GAAP financial measures show the Company’s core business operations while excluding certain items that are not part of our core operations such as pension settlement expense, consulting costs related to the Company’s operational improvement plan, transition costs related to back-office optimization, write-off of debt issuance costs, costs related to shareholder matters, and store closing costs net of related gains on the sale of owned locations, lease assignments and early lease terminations. These non-GAAP financial measures are not intended to represent, and should not be considered more meaningful than, or as an alternative to, their most directly comparable GAAP measures. These non-GAAP financial measures may be different from similarly titled non-GAAP financial measures used by other companies. Comparable Store Sales The Company defines comparable store sales as sales for locations that have been opened or owned at least one full fiscal year. The Company believes this period is generally required for new store sales levels to begin to normalize. Management uses comparable store sales to assess the operating performance of the Company’s stores and believes the metric is useful to investors because the Company’s overall results are dependent upon the results of its stores. Source: Monro, Inc.MNRO-Fin View source version on businesswire.com: https://www.businesswire.com/news/home/20260729114266/en/ Contacts Investors and Media: Felix VekslerVice President, Investor [email protected]

Interested in Monro Muffler Brake, Inc.? Here are five stocks we like better. Fiscal first-quarter sales fell 4.6% to $287.1 million, driven by the closure of 145 underperforming stores and a 1.7% decline in comparable-store sales. Lower traffic and consumer deferrals of higher-cost tire and brake repairs outweighed a 4% increase in average repair orders. Operating income improved to $3.7 million from a $6.1 million loss, while the net loss narrowed to $2.1 million, or $0.08 per share. However, cash flow was pressured by working-capital timing, with $30 million used in operating activities. Monro expects comparable-store sales growth in fiscal 2027 while maintaining gross margins and increasing marketing investment. The company is also reviewing strategic alternatives, including asset sales, refinancing, acquisitions, operational changes or a potential sale, with no guaranteed outcome or timeline. 3 Stocks That Could See Rising Demand Based on Latest Jobs Data Monro Muffler Brake (NASDAQ:MNRO) reported a fiscal first-quarter sales decline as lower customer traffic and consumer caution around higher-ticket repairs weighed on results, though management said its marketing, store operations and merchandising initiatives continued to advance. Sales fell 4.6% to $287.1 million in the quarter, Chief Financial Officer Brian D’Ambrosia said. The decrease reflected a $9 million sales impact from the closure of 145 underperforming stores in the first quarter of fiscal 2026, along with a 1.7% decline in comparable-store sales at continuing locations. → This Tiny AI Supplier Could Be More Important Than the Chipmakers Top 2 Small Cap Automotive Stocks Set for a Strong Rally Comparable sales rose 1% in April before declining 2% in May and 3% in June. Preliminary July comparable sales were down approximately 1%, according to President and Chief Executive Officer Peter Fitzsimmons. “This was an undeniably difficult fiscal first quarter for Monro,” Fitzsimmons said, citing geopolitical tensions in the Middle East, higher oil prices and resulting pressure on customer spending and traffic across the company’s store network. → Refiner Stocks Are Near Record Highs—Can Iran-Driven Margins Keep Them There? Management said the quarterly comparable-sales decline was driven by lower traffic, while customers deferred more expensive purchases such as tires and brakes and shifted toward lower-cost tire choices. D’Ambrosia said average ticket increased about 4%, while traffic declined by the mid-single digits. Tire-category sales declined 1%, but tire unit volume was flat year over year. Fitzsimmons said the company believes it gained share in tier-one tires and in its overall tire category, supported by promotional activity and the addition of an opening-price-point tire option in tier four. → Innovative ETF Strategies That Are Paying Off This Summer Monro also reported year-over-year comparable-store sales growth in batteries, alignments and front-end shops. Battery comparable sales rose 8% during the quarter, which management attributed to improvements in store stocking programs, front-of-shop presentations and the use of its ConfiDrive vehicle-inspection process. Fitzsimmons said ConfiDrive, which provides customers with visual documentation of vehicle needs, has helped improve customer understanding and support average repair-order growth. The company also expanded a district-manager toolkit to roughly 340 locations from an initial 150 underperforming stores. The broader program now targets overall store-profit improvement opportunities rather than focusing only on gross margins. Management said it maintained marketing investment during the quarter, even as sales weakened. Marketing costs increased $4.9 million year over year, while the company continued to refine its use of customer relationship management tools, artificial intelligence and machine learning to tailor customer outreach, timing and promotional offers. The company increased use of pay-per-click advertising in markets where it identified customers with in-market demand for its products and services. Fitzsimmons said the combination of digital advertising targeted at new customer acquisition and CRM offers directed to existing customers helped support tire performance. He cited South Florida as an example, where additional pay-per-click spending and changes to pricing offers for certain oil products led to a significant increase in units. Management said it is using the data generated by its marketing efforts to direct spending toward regions where it sees the greatest potential benefit. Fitzsimmons said elevated gas, food and health-care costs have pressured some consumers’ budgets. In response, customers have bought fewer tires per transaction and have become more selective among tire options in tiers two through four, he said. He added that the company has seen some evidence of a shift back toward higher-tier tire purchases in recent months, which could support tire margins if it continues. Gross margin declined 50 basis points from the prior-year period. D’Ambrosia said occupancy costs increased by roughly 90 basis points as a percentage of sales because of lower comparable sales, partially offset by a 40-basis-point improvement in technician labor costs. Material costs were flat year over year. Total operating expenses fell to $96.7 million, or 33.7% of sales, from $113 million, or 37.5% of sales, a year earlier. The decline included lower store-closing costs, reduced expenses from previously closed stores and lower consulting costs related to the operational improvement plan. Those savings were partly offset by higher marketing and continuing-store costs, primarily front-shop labor. Operating income was $3.7 million, compared with an operating loss of $6.1 million a year earlier. Adjusted operating income, a non-GAAP measure, was $2.2 million, compared with $14 million in the prior-year quarter. Net loss narrowed to $2.1 million, or $0.08 per diluted share, from a net loss of $8.1 million, or $0.28 per diluted share, a year earlier. Cash used in operating activities was $30 million, largely due to the timing of payments that made accounts payable and accrued expenses a use of cash during the quarter. Capital expenditures totaled $8 million, principal payments on financing leases were $9 million, and dividends paid totaled $9 million. At quarter-end, Monro had net bank debt of $99 million, about $261 million of availability under its credit facility, and approximately $10 million in cash and equivalents. The company exited six leases and sold four owned closed-store locations during the quarter, generating cumulative proceeds of $3 million. It said 37 closed stores remained with potential for monetization over the next several quarters. For fiscal 2027, Monro expects year-over-year comparable-store sales growth, primarily driven by its performance-improvement initiatives. It expects full-year gross margin to be consistent with fiscal 2026, reflecting continued cost inflation, and expects higher selling, general and administrative expenses as it invests in marketing. Capital expenditures are expected to be between $25 million and $35 million. The company also continues to review strategic alternatives with Bank of America and Solomon Partners as financial advisers and legal advisers. Fitzsimmons said the review includes potential asset sales, refinancing, strategic acquisitions, operational improvements or a sale of the company. He said there is no deadline or definitive timeline for the process and no assurance it will result in a transaction or other outcome. Monro Muffler Brake (NASDAQ:MNRO) is a leading provider of undercar repair and maintenance services for light vehicles in the United States. The company's core offerings include brake systems, exhaust systems, steering and suspension repairs, tire sales and service, oil and lube changes, wheel alignment, multi-point inspections, and state vehicle inspections. Monro serves both retail customers and fleet accounts, focusing on fast, reliable service and preventive maintenance to help extend vehicle life and safety. Headquartered in Rochester, New York, Monro was originally founded in 1957 and has grown through a combination of organic expansion and strategic acquisitions. This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected]. The article "Monro Muffler Brake Q1 Earnings Call Highlights" was originally published by MarketBeat. View MarketBeat's top stocks for July 2026.

This article first appeared on GuruFocus. Revenue: Decreased 4.6% to $287.1 million in the first quarter. Comparable Store Sales: Declined 1.7% during the quarter. Gross Margin: Decreased by 50 basis points compared to the prior year. Operating Income: $3.7 million or 1.3% of sales, compared to an operating loss of $6.1 million in the prior year period. Net Loss: $2.1 million, compared to a net loss of $8.1 million in the same period last year. Diluted Loss Per Share: $0.08, compared to $0.28 in the prior year period. Adjusted Operating Income: $2.2 million or 0.8% of sales, compared to $14 million or 4.7% of sales in the prior year period. Cash Used for Operating Activities: $30 million, largely driven by timing of payments. Capital Expenditures: $8 million invested during the quarter. Store Closures: Closure of 145 underperforming stores in the first quarter of fiscal 2026 impacted sales by $9 million. Net Bank Debt: $99 million at the end of the first quarter. Cash and Equivalents: Approximately $10 million at the end of the first quarter. Warning! GuruFocus has detected 5 Warning Signs with MNRO. Is MNRO fairly valued? Test your thesis with our free DCF calculator. Release Date: July 29, 2026 For the complete transcript of the earnings call, please refer to the full earnings call transcript. Monro Inc (NASDAQ:MNRO) has made significant operational improvements, which are gaining traction and positioning the company to capture market share and drive profitability as conditions normalize. The company has enhanced its marketing capabilities, including refining media allocation and customer outreach, which has improved campaign response rates and customer acquisition. Monro Inc (NASDAQ:MNRO) has successfully implemented its ConfiDrive inspection tool, which has improved customer trust and understanding of vehicle needs, contributing to higher average repair order growth. The company has maintained its marketing investment despite sales headwinds, focusing on long-term growth and market share opportunities. Monro Inc (NASDAQ:MNRO) has seen year-over-year comparable store sales growth in higher margin service categories such as batteries, alignments, and front-end shocks, indicating strong service value delivery. Monro Inc (NASDAQ:MNRO) faced a challenging operating environment in the first quarter, with a 1.7% decline in comparable store sales due to lower store traffic and deferred higher ticket spending by consumers. The company experienced a 4.6% decrease in total sales, primarily driven by the closure of 145 underperforming stores and a decrease in comparable store sales. Gross margin decreased by 50 basis points compared to the prior year, mainly due to higher occupancy costs as a percentage of sales. Monro Inc (NASDAQ:MNRO) reported a net loss of $2.1 million for the first quarter, compared to a net loss of $8.1 million in the same period last year. The company is facing continued pressure from high gas prices and other consumer cost increases, impacting consumer spending and leading to a negative 1.2% comp in July. Q: Could you elaborate on the marketing strategies that have contributed to stabilizing tire volume trends? A: Peter Fitzsimmons, President and CEO, explained that the combination of digital marketing for new customer acquisition, particularly pay-per-click strategies, and CRM efforts targeting existing customers with specific offers, have been effective. These strategies have helped maximize tire performance despite industry challenges. Q: What factors contributed to the negative 1.2% comp in July, and are there specific product or service areas affected? A: Peter Fitzsimmons noted that high gas, food, and healthcare prices continue to pressure consumers, impacting discretionary spending. While Monroe offers non-discretionary services, consumers are prioritizing their spending, affecting comps. The company remains focused on improving customer experience and merchandising to attract customers. Q: How do fluctuating oil prices impact your business, and do you see consumer behavior change when prices moderate? A: Peter Fitzsimmons stated that high oil prices lead to deferral of high-ticket items like tires and brakes. When prices moderate, consumers tend to return, but currently, they are buying fewer tires per transaction and being more selective in their purchases. Q: With the current economic pressures, are there additional strategies Monroe can implement to offset these challenges? A: Peter Fitzsimmons mentioned that Monroe can optimize marketing investments, particularly in regions where they see potential for increased traffic. For example, targeted marketing in South Florida led to significant increases in units sold. Q: Can you provide more detail on the gross margin decline and expectations for the rest of the fiscal year? A: Brian D'Ambrosia, CFO, explained that the 50 basis point decline was due to higher occupancy costs, partially offset by lower technician labor costs. The company expects improved comparable store sales to leverage fixed costs better, maintaining consistent gross margins for the year. For the complete transcript of the earnings call, please refer to the full earnings call transcript.

What a brutal six months it’s been for Monro. The stock has dropped 32.2% and now trades at $14.10, rattling many shareholders. This was partly due to its softer quarterly results and may have investors wondering how to approach the situation. Is now the time to buy Monro, or should you be careful about including it in your portfolio? Check out our in-depth research report to see what our analysts have to say, it’s free. Even with the cheaper entry price, we don’t have much confidence in Monro. Here are three reasons we avoid MNRO, plus one stock we’d rather own. The number of stores a retailer operates is a critical driver of how quickly company-level sales can grow. Monro operated 1,115 locations in the latest quarter. Over the last two years, the company has generally closed its stores, averaging 7.1% annual declines. When a retailer shutters stores, it usually means that brick-and-mortar demand is less than supply, and it is responding by closing underperforming locations to improve profitability. Same-store sales show the change in sales for a retailer’s e-commerce platform and brick-and-mortar shops that have existed for at least a year. This is a key performance indicator because it measures organic growth. Monro’s demand has been shrinking over the last two years as its same-store sales have averaged 1.2% annual declines. We track the long-term change in earnings per share (EPS) because it highlights whether a company’s growth is profitable. Sadly for Monro, its EPS declined by 31.9% annually over the last three years, more than its revenue. This tells us the company struggled because its fixed cost base made it difficult to adjust to shrinking demand. We cheer for all companies serving everyday consumers, but in the case of Monro, we’ll be cheering from the sidelines. Following the recent decline, the stock trades at 43.2× forward P/E (or $14.10 per share). This valuation tells us a lot of optimism is priced in - we think other companies feature superior fundamentals at the moment. Let us point you toward one of our all-time favorite software stocks. ONE MORE THING: Top 6 Stocks for This Week. This market is separating quality stocks from expensive ones fast. AI is taking down whole sectors with no warning. In a rotation this fast, you need more than a list of good companies. Our AI system flagged Palantir before it ran 1,662%. AppLovin before it ran 753%. Nvidia before it ran 1,178%. Each week it produces 6 new names that pass the same tests. Get Our Top 6 Stocks for Free HERE. Stocks that have made our list include now familiar names such as Nvidia (+1,326% between June 2020 and June 2025) as well as under-the-radar businesses like the once-micro-cap company Tecnoglass (+1,754% five-year return). Find your next big winner with StockStory today.

This article first appeared on GuruFocus. Revenue: $273.8 million, a decrease of 7.2% in the fourth quarter. Comparable Store Sales: Declined 2.4% from continuing store locations. Tire Units: Declined 5% during the quarter. Gross Margin: Increased 90 basis points to 33.9% year-over-year. Operating Expenses: $98.1 million or 35.8% of sales, down from $121.1 million or 41.1% of sales in the prior year period. Operating Loss: $5.2 million or negative 1.9% of sales. Net Loss: $6.6 million, compared to $21.3 million in the same period last year. Diluted Loss Per Share: $0.23, compared to $0.72 in the prior year period. Cash from Operations: $70 million generated during fiscal 2026. Store Closures: Closed 145 underperforming stores in fiscal 2026. Store Locations: 1,115 stores at the end of the fiscal year. Warning! GuruFocus has detected 5 Warning Signs with MNRO. Is MNRO fairly valued? Test your thesis with our free DCF calculator. Release Date: May 27, 2026 For the complete transcript of the earnings call, please refer to the full earnings call transcript. Monro Inc (NASDAQ:MNRO) has successfully expanded the usage of its ConfiDrive inspection tool, enhancing customer experience and transparency. The company has improved its gross margin by 90 basis points year-over-year, reaching 33.9%, demonstrating productivity gains. Monro Inc (NASDAQ:MNRO) has strengthened strategic relationships with core suppliers, improving inventory availability and ensuring stores remain stocked. The company has maintained its marketing investment despite sales headwinds, focusing on long-term growth objectives. Monro Inc (NASDAQ:MNRO) has a strong financial position, generating $70 million of cash from operations during fiscal 2026. Comparable store sales declined by 2% in the fourth quarter, reflecting a challenging operating environment. The company experienced a 5% decline in tire units during the quarter, aligning with broader industry trends. Severe winter weather led to temporary store closures and reduced customer traffic, impacting sales. Monro Inc (NASDAQ:MNRO) reported a net loss of $6.6 million for the fourth quarter, compared to a net loss of $21.3 million in the same period last year. The company expects continued cost inflation, which may pressure gross margins in fiscal 2027. Q: What are you seeing in retail material costs, and how might increases in crude oil prices affect your gross margin? A: Peter Fitzsimmons, President and CEO, noted that there is an expected increase in oil costs, which could impact material costs. Monro is prepared to adjust as necessary to maintain profitability, leveraging strong vendor relationships to manage potential inflation or input cost increases. Q: Can you provide more details on the performance in fiscal Q1 '27, particularly regarding traffic and ticket trends? A: Peter Fitzsimmons explained that while there is pressure on certain customers, Monro is seeing increased volume in Tier 4 tires and strong sales in Tier 1 tires. Despite some deferred maintenance, there is significant strength in various districts, and the company remains optimistic about overcoming current uncertainties. Q: What percentage of tires sold were Tier 4 in Q4 '26, and what is the price difference between Tier 1 and Tier 4 tires? A: Brian D'Ambrosia, CFO, stated that Tier 4 tires accounted for about 30% of sales in Q4 '26, up from 25% a year ago. The price differential across tiers is typically $20 to $30. Q: With quarter-to-date comps tracking down, what are the drivers for your expectations of positive comps for the full year? A: Peter Fitzsimmons emphasized that Monro's initiatives in marketing, merchandising, and store performance are expected to drive positive comparable store sales for the year, despite current market challenges. Q: How does Monro plan to manage SG&A expenses, and what is the expected impact on earnings? A: Brian D'Ambrosia explained that SG&A expenses are expected to be higher year-over-year, particularly in the first half, due to increased marketing investments. These investments are crucial for driving positive comparable store sales and are part of Monro's strategy to enhance performance. For the complete transcript of the earnings call, please refer to the full earnings call transcript.