Monro, Inc. Reports 3.7% Sales Decline and Decreased Net Income in Q3 Fiscal 2025

Monro, Inc. reported a decline in financial performance for the third quarter of fiscal 2025, with sales totaling $305.8 million, a decrease of 3.7% compared to $317.7 million in the same period last year. The company's net income also fell to $4.6 million, down from $12.2 million in the prior year, resulting in diluted earnings per share of $0.15, compared to $0.38. For the nine months ended December 28, 2024, total sales were $900.3 million, down 6.9% from $966.7 million, with net income of $16.1 million compared to $33.9 million in the previous year.

The decline in revenue was attributed primarily to lower comparable store sales, which decreased by 1.9% year-over-year, reflecting reduced store traffic. The company noted that while overall sales were down, there was a return to year-over-year growth in comparable store sales in December. Additionally, Monro's gross profit margin decreased by 120 basis points for the quarter, driven by increased material costs and self-funded promotions, although improvements in labor productivity partially offset these increases.

Operationally, Monro maintained 1,263 company-operated retail stores across 32 states, with 47 Car-X franchised locations as of December 28, 2024. The company reported a working capital deficit of $234 million, an increase from $201.9 million at the end of the previous fiscal year, largely due to its supply chain finance program. Monro's cash and equivalents rose to $10.2 million, with $510.6 million available under its revolving credit facility.

Strategically, Monro has been navigating challenges posed by economic conditions, including inflation and labor market constraints, which have affected consumer demand. The company is also dealing with uncertainties related to its distribution agreement with American Tire Distributors, Inc. (ATD), which filed for bankruptcy in October 2024. Monro is actively seeking the remaining earnout payments from its divestiture of assets to ATD, which could impact future operations.

Looking ahead, Monro anticipates continued challenges from the economic environment, which may affect customer demand and overall sales. The company plans to focus on improving operational efficiencies and maintaining liquidity to support its growth initiatives, including potential acquisitions and store openings. Monro declared dividends of $0.28 per share for the third quarter, consistent with the prior year, reflecting its commitment to returning value to shareholders despite the current financial pressures.