Auto services provider Monro (NASDAQ: MNRO) missed Wall Street’s revenue expectations in Q3 CY2025, with sales falling 4.1% year on year to $288.9 million. Its non-GAAP profit of $0.21 per share was 16.7% above analysts’ consensus estimates.

Is now the time to buy MNRO? Find out in our full research report (it’s free for active Edge members).

StockStory’s Take

Monro’s third quarter was marked by a significant negative market reaction following results that missed Wall Street’s revenue expectations. Management attributed the year-over-year sales decline to the closure of 145 underperforming stores and softer consumer demand, particularly among lower-income customers. CEO Peter Fitzsimmons cited progress in digital marketing and customer segmentation as partial offsets, noting, “We have now ramped our refined targeting to almost 600 stores, and we are encouraged to see that these stores are outperforming the balance of our store chain.” The company’s cost controls and improved merchandising, including enhanced vendor support and inventory management, helped maintain operating margins despite the revenue decline.

Looking ahead, Monro’s management is focused on scaling its digital marketing initiatives and further rolling out centralized call centers across its store network to drive customer acquisition and higher value customer engagement. Fitzsimmons emphasized, “We plan to ramp up and scale these efforts by the end of December,” signaling confidence in their ability to generate positive comparable store sales despite a challenging consumer environment. The company also aims to balance tariff-related cost pressures with targeted price adjustments and expects store optimization and operational improvement plans to support both margins and cash flow in the coming quarters.

Key Insights from Management’s Remarks

Management linked the quarter’s performance to ongoing store closures, enhancements in marketing and merchandising, and targeted efficiency programs, which are expected to influence both near-term results and longer-term profitability.

• Store footprint optimization: The closure of 145 underperforming stores earlier in the year was a primary reason for the sales decline, but management believes this has allowed for sharper operational focus and improved profitability at remaining locations.
• Digital marketing acceleration: By ramping up refined digital marketing and customer segmentation strategies across nearly 600 stores, Monro reported outperformance in call volumes, store traffic, and gross profit generation compared to the rest of its network.
• Centralized call center expansion: The rollout of a centralized appointment scheduling call center to over 700 stores has freed up in-store staff to focus on customer service and sales execution, with expansion to the full network planned by early November.
• Vendor collaboration and inventory management: Enhanced support from tire vendors and the implementation of new analytical tools for demand forecasting and pricing have helped accelerate inventory sell-through and maintain competitive pricing, while offsetting some material and tariff-related cost increases.
• Field management realignment: Streamlining district management following store closures has allowed Monro to increase the quality and focus of field leadership, with a new toolkit introduced to help managers better understand and drive store-level performance metrics.

Drivers of Future Performance

Monro’s forward-looking priorities are shaped by efforts to drive positive comparable store sales, manage cost inflation, and offset tariff impacts through operational improvements and targeted pricing.

• Digital and CRM marketing expansion: Management expects increased investment in digital marketing and customer relationship management (CRM) to reach higher-value customers, aiming to drive repeat business and increase average transaction size as more stores are included in targeted campaigns.
• Tariff and cost management: The company is actively managing tariff-related cost increases through vendor negotiations, assortment adjustments, and selective price increases, with the goal of maintaining gross margins even as input costs rise.
• Store operations and cost control: Continued focus on operational discipline—including centralized scheduling, field management realignment, and prudent SG&A investments—is expected to partially offset inflationary pressures and support earnings stability, even as Monro invests in marketing and technology upgrades.

Catalysts in Upcoming Quarters

In the coming quarters, our analyst team will be monitoring (1) the pace and effectiveness of digital marketing and centralized call center rollouts across the remaining store base, (2) progress on real estate dispositions related to closed stores and the resulting impact on cash flow, and (3) the company’s ability to balance tariff-related cost increases with price adjustments and vendor support. The resilience of consumer demand and the success of new marketing strategies will be key signposts for sustained improvement.

Monro currently trades at $14.55, down from $18.08 just before the earnings. In the wake of this quarter, is it a buy or sell? The answer lies in our full research report (it’s free for active Edge members).

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