Auto services provider Monro (NASDAQ: MNRO) reported revenue ahead of Wall Street’s expectations in Q1 CY2025, but sales fell by 4.9% year on year to $295 million. Its non-GAAP loss of $0.09 per share was significantly below analysts’ consensus estimates.
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Monro (MNRO) Q1 CY2025 Highlights:
- Revenue: $295 million vs analyst estimates of $289.5 million (4.9% year-on-year decline, 1.9% beat)
- Adjusted EPS: -$0.09 vs analyst estimates of $0.03 (miss)
- "Encouragingly, our sales momentum has continued into our first quarter of fiscal 2026 with preliminary quarter-to-date comparable store sales that are up approximately 7%"
- Monro "conducted a comprehensive store portfolio review that identified 145 underperforming stores for closure and has initiated a process to close these locations during the first quarter of fiscal 2026"
- Operating Margin: -8.1%, down from 3.3% in the same quarter last year
- Same-Store Sales rose 2.8% year on year (-3.6% in the same quarter last year)
- Market Capitalization: $382.5 million
Company Overview
Started as a single location in Rochester, New York, Monro (NASDAQ: MNRO) provides common auto services such as brake repairs, tire replacements, and oil changes.
Sales Growth
A company’s long-term performance is an indicator of its overall quality. Any business can put up a good quarter or two, but many enduring ones grow for years.
With $1.20 billion in revenue over the past 12 months, Monro is a small retailer, which sometimes brings disadvantages compared to larger competitors benefiting from economies of scale and negotiating leverage with suppliers.
As you can see below, Monro struggled to increase demand as its $1.20 billion of sales for the trailing 12 months was close to its revenue six years ago (we compare to 2019 to normalize for COVID-19 impacts). This was mainly because it didn’t open many new stores and observed lower sales at existing, established locations.
This quarter, Monro’s revenue fell by 4.9% year on year to $295 million but beat Wall Street’s estimates by 1.9%.
Looking ahead, sell-side analysts expect revenue to grow 1.8% over the next 12 months. While this projection implies its newer products will spur better top-line performance, it is still below the sector average.
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Store Performance
Number of Stores
The number of stores a retailer operates is a critical driver of how quickly company-level sales can grow.
Over the last two years, Monro has kept its store count flat while other consumer retail businesses have opted for growth.
When a retailer keeps its store footprint steady, it usually means demand is stable and it’s focusing on operational efficiency to increase profitability.
Note that Monro reports its store count intermittently, so some data points are missing in the chart below.
Same-Store Sales
A company's store base only paints one part of the picture. When demand is high, it makes sense to open more. But when demand is low, it’s prudent to close some locations and use the money in other ways. Same-store sales provides a deeper understanding of this issue because it measures organic growth at brick-and-mortar shops for at least a year.
Monro’s demand has been shrinking over the last two years as its same-store sales have averaged 3.3% annual declines. This performance isn’t ideal, and we’d be concerned if Monro starts opening new stores to artificially boost revenue growth.
In the latest quarter, Monro’s same-store sales rose 2.8% year on year. This growth was a well-appreciated turnaround from its historical levels, showing the business is regaining momentum.
Key Takeaways from Monro’s Q1 Results
It was encouraging to see Monro beat analysts’ revenue expectations this quarter. Additionally, the market likes two additional aspects of the print: comments that sales in the current quarter are up a healthy 7% thus far and initiatives to close 145 underperforming stores. The stock traded up 8.9% to $13.90 immediately after reporting.
Is Monro an attractive investment opportunity at the current price? The latest quarter does matter, but not nearly as much as longer-term fundamentals and valuation, when deciding if the stock is a buy. We cover that in our actionable full research report which you can read here, it’s free.
