Monro’s second quarter results received a negative market reaction, as investors digested management’s explanation for margin pressures and continued structural changes. The company attributed core performance to the successful closure of 145 underperforming stores, ongoing efforts to optimize merchandising, and targeted customer acquisition strategies. CEO Peter Fitzsimmons noted, “The closure of these stores will have limited impact on our total sales, but is expected to deliver meaningful improvement to our profitability.” Despite steady same-store sales growth and cost control in continuing operations, higher technician labor costs and material inflation weighed on gross margins, leading management to acknowledge a cautious outlook for near-term profitability.
Is now the time to buy MNRO? Find out in our full research report (it’s free).
Monro (MNRO) Q2 CY2025 Highlights:
- Revenue: $301 million vs analyst estimates of $296.1 million (2.7% year-on-year growth, 1.7% beat)
- Adjusted EPS: $0.22 vs analyst estimates of $0.15 (48.6% beat)
- Adjusted EBITDA: $29.76 million vs analyst estimates of $26.71 million (9.9% margin, 11.4% beat)
- Operating Margin: -2%, down from 4.5% in the same quarter last year
- Locations: 1,115 at quarter end, down from 1,284 in the same quarter last year
- Same-Store Sales rose 5.7% year on year (-9.9% in the same quarter last year)
- Market Capitalization: $458.7 million
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From Monro’s Q2 Earnings Call
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Thomas Wendler (Stephens) asked about the SG&A improvement from store closures. CFO Brian D’Ambrosia explained that while some benefit was realized this quarter, the full impact on expenses will become more evident in coming quarters.
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Wendler (Stephens) inquired about the sustainability of same-store sales trends. CEO Peter Fitzsimmons suggested focusing on the positive trajectory over several months, rather than monthly fluctuations, and expects steady improvement.
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David Lantz (Wells Fargo) questioned the drivers behind the 170 basis point gross margin decline. D’Ambrosia attributed it to higher technician labor costs from wage inflation and increased material costs from value-oriented tire mix and promotions.
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Lantz (Wells Fargo) also asked for detail on traffic and ticket trends. Fitzsimmons clarified that traffic was flat but average ticket size increased, and management is optimistic about traffic gains from the new marketing approach.
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Bret Jordan (Jefferies) sought clarification on the cash flow impact of divesting owned real estate from closed stores. D’Ambrosia confirmed that these were not mortgaged, and the process is expected to generate positive cash flow over the next year.
Catalysts in Upcoming Quarters
Looking ahead, the StockStory team will focus on (1) the realized profitability improvement from store closures and related real estate sales, (2) the effectiveness of new digital marketing and ConfiDrive-enabled service enhancements in driving traffic and higher repair orders, and (3) management’s ability to mitigate ongoing margin pressures from tariffs and labor costs. Progress in these areas will be critical for Monro’s operational turnaround.
Monro currently trades at $15.28, down from $16.33 just before the earnings. In the wake of this quarter, is it a buy or sell? Find out in our full research report (it’s free).
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