Monro Muffler Brake at 25th Annual Consumer Conference: Strategic Shifts Ahead

On Tuesday, June 10, 2025, Monro Muffler Brake Inc. (NASDAQ:MNRO) participated in the 25th Annual Consumer Growth and E-Commerce Conference. The event, featuring a discussion between Oppenheimer’s Brian Nagel and Monro’s Brian D’Ambrosia, highlighted the company’s recent performance, strategic pivots, and future outlook. While Monro reported positive sales growth, challenges such as pressured gross margins and leadership transitions were also acknowledged.

Key Takeaways

• Monro reported a 2.8% increase in Q4 2025 comp store sales, adjusted for a 53-week prior year.
• The company is closing 145 underperforming stores, representing about 5% of total sales.
• New CEO Peter Fitzsimmons is leading a performance improvement plan focused on profitability.
• Monro is pausing acquisitions to concentrate on internal improvements and future growth.
• The company is navigating challenges such as tariffs and wage inflation while maintaining a focus on customer value.

Financial Results

• Q4 2025 Comp Store Sales: Increased by 2.8%, adjusted for the 53rd week in the prior year, with sequential improvement throughout the quarter.
• Gross Margin: Decreased by 250 basis points, impacted by promotional tire pricing and extreme weather in January.
• April-May Comp Store Sales Growth: Achieved mid-single-digit growth.
• Tire Units: Noted growth in tire units in Q4, with over 10% growth in March.
• FY26 Capital Allocation Priorities: Includes $25-35 million in capital expenditures, $40 million in finance lease payments, and a $35 million dividend, totaling $105 million.

Operational Updates

• Store Closures: Closing 145 underperforming stores by the end of fiscal Q1 2026, impacting approximately $45 million in sales.
• Leadership Change: Peter Fitzsimmons has taken over as CEO to spearhead a performance improvement plan.
• Focus Areas for Improvement: Includes closing unprofitable locations, enhancing customer experience, and improving marketing and merchandising productivity.
• ConferDrive Digital Courtesy Inspection: Aims to convert existing traffic into other services.
• Tariff Impact: Monro is negotiating with suppliers and considering price adjustments to manage tariff-related cost increases.

Future Outlook

• Acquisition Strategy: The company is pausing acquisitions to focus on internal improvements and building a solid platform for future growth.
• Growth Timetable: No specific timetable for resuming acquisitions or store growth has been set.
• FY26 Expectations: Monro anticipates comp sales growth and adjusted diluted earnings per share growth, while maintaining a low leverage profile.

Q&A Highlights

• Sales Growth Drivers: Improvement in tire units and conversion into service categories from Confidrive.
• Competitive Landscape: Monro is focusing on the local customer experience and leveraging scale and buying power to compete effectively.
• Repositioning Investment: The company is focusing on human capital to ensure consistent performance across the organization.

For a detailed account of the conference call, readers are encouraged to refer to the full transcript below.

Full transcript - 25th Annual Consumer Growth and E-Commerce Conference:

Brian Nagel, Senior Equity Research Analyst, Oppenheimer: Well, good morning. Thank you all for joining us. My name is Brian Nagel. I’m a senior equity research analyst here at Oppenheimer covering consumer growth and ecommerce. So this is our twenty fifth annual Oppenheimer consumer growth and ecommerce conference.

We very much appreciate all of you attending. So I’m pleased to have with us our next presenting company, Monroe, and two of the company’s senior executives, Brian D’Ambrosia, and investor relations, Felix Bechsler. So, gentlemen, thank you for joining us.

Brian D’Ambrosia, Investor Relations, Monroe: Thanks for having us,

Brian Nagel, Senior Equity Research Analyst, Oppenheimer: Brian. So we’re gonna structure this as a informal fireside chat with me asking questions and the Monroe team answering those questions. You know, to the extent there are questions from the audience, just send them through the chat, I’ll be happy to work them into our conversation. But with that, Brian, I was hoping maybe we could just start. You know, not that long ago, Monroe reported quarterly results.

Stock had a nice pop on those results. So maybe we can just start kind of with quick recap, if you will, of that quarterly announcement. Would you view some of the highlights there?

Brian D’Ambrosia, Investor Relations, Monroe: Absolutely. So the quarter in the quarter, we delivered positive comp store sales growth of 2.8% adjusted for days. Our prior year was a fifty three week year. So adjusted for that, we delivered 2.8% increase in comps. And we also saw sequential improvement in comps as the quarter progressed.

Comps in our tire category, in our high margin service categories both on a sales and unit basis improved. And importantly, saw a year over year increase in traffic in March, which was the start of a trend that continued into April and May. So our overall gross margin and profitability was pressured in the quarter. We saw two fifty basis points of deleverage on our gross margin line. That was exacerbated by some impact of extreme weather in the half of the quarter.

And that was that resulted in some store closures and some lower store traffic in January. And profitability in the half of the quarter was better. Overall, that sales momentum has continued on into April and May through the eight weeks of our fiscal Q1 with basically mid single digit comp store sales growth in April and May. And that’s continuing to be supported, like I said, by better traffic trends, and we’re glad to see that we’re we’re bending the traffic curve in in the recent months. So that that’s really the the highlights from the quarter in terms of results, and and we did also announce some some initiatives that I’m sure we’ll get into related to related to what we are looking to work on for the balance of f I twenty six.

Brian Nagel, Senior Equity Research Analyst, Oppenheimer: That’s very helpful. So let’s just maybe let’s look more on the quarterly results before we we dive into the other issues. But I mean, look, for me, you know, the key positive here is that you’re seeing stronger sales growth. You talked about that a moment ago. How how should we think about that?

Is is that was is that your reflection of the initiatives that have been happening in Monroe? Is it a better is it a better sector backdrop? Is there a weather component?

Brian D’Ambrosia, Investor Relations, Monroe: Yeah. I think that it it’s a continuation of the improvement that we’ve seen all the way back to our q one. So we’ve seen sequential improvement in comps from our low point in Q1 all the way through the positive 3%, roughly 2.8% that we delivered in Q4 and that continuing in April and May. So I think it’s a continuation of that comp trend, which really has been supported by an improvement in tire units. We’ve seen a recovery in our tire units to now year over year unit growth.

We made the comment that we grew units in Q4 and that was led by a 10% plus growth in tire units in March. So that trend is supportive. It is that unit growth is putting some of the pressure on our gross margin because we are fairly promotional versus what we were a year ago to continue to attract value oriented consumers into our stores and to also maintain the appropriate mix of tires without having them trade fully down to our tier four offering, is an even lower margin offering for us. So that’s been supportive. And then at the same time during FY twenty five, we implemented our ConferDrive digital courtesy inspection.

And the benefit of that is that we when we laid it out was that ultimately we’re going to be able to convert more of our existing traffic into other services and better build our service tickets off of our existing car count. And I think as you see, we’ve seen that play out as well, with the inflection in our service categories back in Q3, we talked about the momentum that we were gaining in our service categories and that growth continued in Q4 with all except for alignment service categories up in the quarter and that continuing in April and May. So I think the recovery in entire units with the conversion into service categories from Confidrive has really been the difference over the last couple of quarters, and in particular, the four month positive comp period that we starting in February that we talked about on the call.

Brian Nagel, Senior Equity Research Analyst, Oppenheimer: That’s very helpful. So I do wanna just take us one step back. You know, it’s been a rather significant man leadership change at at Monroe just just recently announced. So maybe you can discuss that, you know, the the kind of the nature of the change, the new management team, you know, and and and so to say the mandates that are that that this new this new team is under.

Brian D’Ambrosia, Investor Relations, Monroe: Yeah. Absolutely. So Peter Fitzsimmons assumed this role of CEO, basically, the day of our fiscal FY twenty six. And and Peter’s primary objective is to work with our the company’s management team and the board and develop and execute a performance improvement plan, and that will, you know, enhance our operations, drive operating income, and ultimately total shareholder returns. Peter spent the eight plus weeks of his tenure with us here in Rochester with senior leadership.

Anytime that he, that he has not already been out in the field. So he’s been fully immersed in our business. Like I said, spent a lot of time with leadership and to and our teammates in the field, and has visited a lot of our stores, but also a lot of the of our competitors’ stores to really understand, what opportunities we have. And and foremost, this, the time he has spent already has confirmed, his positive view that he had about Monroe, coming in. And and basically, you know, he he it’s reaffirmed his belief in the durability of our business through business cycles, that we’re well positioned as a leader in a very fragmented industry, And that we have scale that gives us competitive advantages over smaller players, and that scale allows us to make the critical investments in our business, our people, our technology, like I just mentioned with Config Drive to deliver that guest experience that we want to across our thousand stores.

On top of that, from a financial standpoint, our business is a consistent cash generator, ample liquidity, solid balance sheet, low bank leverage. So lot of positives for for us to build on. And in terms of building on those positives, on our earnings call, Peter laid out his initial assessment of the business and highlighted four key areas of focus that he identified as opportunities for to to deliver that improved operational profitability and operating income and that will ultimately lead to improved shareholder returns. So those four areas included the closure of unprofitable locations, improving our customer experience and selling effectiveness, driving profitable customer acquisition and activation, basically marketing, and then increasing the merchandising productivity, which which includes our tariff response. So those four areas are the the work streams that we have activated against and believe will deliver value for for Monroe in f I twenty six and beyond.

Brian Nagel, Senior Equity Research Analyst, Oppenheimer: Yeah. So those you know, maybe those are a little less familiar with Monroe, do want you to highlight, you know, Peter comes and I’m gonna say this maybe a little funny, but you can clarify it. You know, Peter Peter comes to Monroe from a as a part of a consultancy. Correct? Yeah.

So our engagement that time meeting.

Brian D’Ambrosia, Investor Relations, Monroe: We’ve engaged with Alex Partners and through which Peter is our CEO through that engagement. And but make no mistake. Peter is our CEO, fully immersed in the business. Our you know, spends his sixty to eighty hours a week, in Rochester or or or in our stores or working on Monroe, from from any other place in our field organization. And he is very committed to delivering on the performance improvement plan that we laid out.

Brian Nagel, Senior Equity Research Analyst, Oppenheimer: Now so you you mentioned, I think, briefly, but I wanna focus a little more. You you announced the closure of, I think, was a 145 underperforming stores. So maybe just discuss that, you know, how how should we think about those stores? Is and then going forward, do do you and your team continue to sort of say review the portfolio of stores for potential other closures?

Brian D’Ambrosia, Investor Relations, Monroe: Yeah. It’s a great question. It’s our most immediate of the four in terms of the activities that are all underway. So we conducted store portfolio review, looked at all of our underperforming stores and then some and identified out of those underperforming stores, 145 to prioritize for closure. The review included the evaluation obviously of the store’s performance, but also market data like market segmentation, demographic data, density within the market, both us and our competitors, and all that data specific to each location.

And, you know, with a also a focus of of how the the stores are are situated within our network. I would say, and foremost, we did not exit any any geographies, any markets. So this this wasn’t a a a targeted geographic decision. This is these stores are located throughout our footprint. And so we’ve sent in motion a play, process to close these locations, by the end of our current fiscal quarter ended June 2026.

It’ll have a limited impact on sales. So said that the stores have about about 5% of our total sales. That’s about $45,000,000 of exposure for f of reduction for f y twenty six, which is a partial year, you know, taking into account that we’ve operated these stores for a couple months in our q one. But the impact on profitability will be more meaningful than the sales reduction. And also in Q1 of FY twenty twenty six, we’re going to incur some closure costs.

In our most recent filings, we disclosed about 10,000,000 to $15,000,000 of expected closure costs in our Q1. So obviously, as a retailer, we’ll continue to evaluate all of our stores every year like we have been. But we don’t anticipate any significant chunks of store closures for the remainder of this year. But all the assumptions that we made as we laid out the performance improvement plan as well as the evaluation of the stores, we’ll continue to revisit to make sure there aren’t any other groups of stores that are not making the the you know, aren’t able to achieve the profitability levels that that we expect they will be able to make with the with the other parts of the improvement plan. And so that’s one of the reasons that we wanna get the closure done quickly here is that we have a lot of value we think we can deliver through those other initiatives, and we wanna move quickly on from closing stores to improving the operations of our remaining stores.

Brian Nagel, Senior Equity Research Analyst, Oppenheimer: Got it. And so we again, followed Monroe for a while now. You know, you you know, again, we have this, you know, this repositioned effort taking taking hold now. Like, I guess the question I wanna ask though is, you know, from a from a longer term growth, so maybe the other side of the question I just asked with with store closures. But, you know, Monroe has historically grown primarily through acquisition.

So where’s the company right now on the on the acquisition or m and a front?

Brian D’Ambrosia, Investor Relations, Monroe: Yeah. So we’ve been on pause for the last, I would say, of years. And and the reason is we’ve been focused on delivering some of the improvement that we expect to be able to deliver through these initiatives and and capitalizing on our on our most recent performance in our q three, four, and into q one of FY twenty six. So, you know, we’ve been internally focused. At the same time, we really haven’t missed out on anything that we wanted to do.

You know, we still evaluate deals that are done in the marketplace, but our focus has been on improving our own operations and really building the consistent and solid platform for us to launch Monro’s next round of unit and store location growth. That’s one of the reasons why our capital allocation priorities are to continue to use our excess cash flow that isn’t allocated to CapEx or to our dividend or to our finance lease payments to use that to continue to maintain a really low leverage profile on the revolver. Because ultimately, I’m not gonna give a specific timeline. I wouldn’t expect too much in ’26. But ultimately, we do believe that one of our key growth drivers will be continuing to grow the business against that solid platform that we’re putting in place and leveraging all of the the processes and and improvements that we’re we expect to deliver against a larger store count.

And and that will ultimately, you know, lead to meaningful value for our shareholders.

Brian Nagel, Senior Equity Research Analyst, Oppenheimer: So at what point you know, so at at at at point do you think you would start to grow again? Is is is there a timetable for that?

Brian D’Ambrosia, Investor Relations, Monroe: Yeah. I mean, there’s no timetable. I would say we’ve got a lot to do in f y twenty six that ends, you know, in March of of twenty six, and and I think we laid out on the last earnings call where our focus is gonna be against the four initiatives. And I think that they will you know, delivery of those initiatives and and progress against those initiatives will put us on the path for that future unit growth.

Brian Nagel, Senior Equity Research Analyst, Oppenheimer: So discuss a bit just the the competitive landscape. You know, is it Monroe is really one of the biggest players in this space, but the space is quite fragmented. So how should we think about your competition in this space? Are there areas where Monroe has significant advantages? And then are there areas where Monroe has to sort of say catch up with other competitors?

Brian D’Ambrosia, Investor Relations, Monroe: Yeah. I think it’s a very fragmented industry. And, ultimately, the consumer really cares about their local experience. Right? They’re they they are not as interested in the fact that you’ve got a thousand stores across all these locations as how does my local Monroe deliver the experience to me.

Do I trust them? Do they do that right the time? And are their prices competitive? So, ultimately, as we assess our the value that we deliver to our consumers, it’s through the lens of the local experience. And we can bring a lot of things as a as a national chain with us with scale and a lot of resources to improve that experience like our digital courtesy inspection.

We can also deliver very compelling value for our consumers because of our our scale and buying power, and we’re doing that through our promotional offerings, and that’s that’s helping to support our tire tire traffic. And then we continue to invest in our technicians and our labor, and that is so that we can deliver a good experience where we’re doing our work right the time, and our technicians can can deliver on that promise. So we feel very well, you know, very well positioned to deliver on all the areas that we think matter to the consumer, and we think that our initiatives that we laid out relative to marketing in store experience merchandising are aligned with what the consumer wants from that local local shop. But we are competing against national chains and those that one and two store operators that have a local presence in any given market. And because of that, you know, we need to make sure we leverage our our strengths in order to to outperform those competitors for the local consumer.

Brian Nagel, Senior Equity Research Analyst, Oppenheimer: And you’ve talked about this a bit, but want to maybe focus a little more on just that that, you know, in store customer offering. I mean, so some of the you know, the it’s and that’s been a big focus for Monroe for a while now to continue to improve and tweak that tweak and improve that. So maybe you talk about what some of the bigger initiatives there, some of the success so far in that in that consumer offering.

Brian D’Ambrosia, Investor Relations, Monroe: Yeah. Absolutely. I mean, it’s been a journey for us as we’ve we’ve acquired tire chains over the years, and we’ve used that to put tires into our service locations. And we’re our our offering has continued to evolve as we’ve broadened out our tire assortment across all of our locations regardless of their their service orientation or tire orientation. And so now this is really this initiative is really focused on making sure that our breadth of offering isn’t overly complicated and and that we simplify it both for our in store teammates and for the guests.

So that at each tier of tire, we really have a focused assortment that we stock, present, and promote for for our our teammates and our guests to have a a really good simple conversation in store about what their options are and what the best fit for their vehicle will be. That being said, this is about what our core assortment is. It’s not about what we have availability to obtain. We will always be able to get any tire that the guest wants or needs or potentially that the teammate may recommend for in a certain situation outside of our our normal assortment. And we’ll be able to do that through our distribution relationships that allow us to get same day delivery of tires to all of our locations.

But we’re gonna narrow the breadth of our core tire assortment, and we think that’ll create a much more efficient process in store and and and ultimately benefit our teammates and our customers.

Brian Nagel, Senior Equity Research Analyst, Oppenheimer: Got it. So I jump to a bigger topic bigger topic that most investors are focused on these tariffs. So, again, from your perspective, I mean, what are you seeing from the tariff landscape and implications for Monroe or maybe the, you know, the the the the auto service space broadly?

Brian D’Ambrosia, Investor Relations, Monroe: Yeah. I would say that, obviously, no company in the auto aftermarket and and and any sector can look at the current outlook and landscape without considering tariffs. And so we’ve it’s obviously it’s a little bit uncertain. Right? We know we’ve got the the auto parts tariffs in place currently, but there is a a little bit of uncertainty in the tariff environment, not just from the permanency, but also from the the response of various manufacturers depending on their their manufacturing footprint.

But that being said, we we are expecting it to drive cost increases against almost all of our our major product categories. So because of that, we mobilized an internal team for negotiations with our top suppliers to try to mitigate as much as possible. We did make an announcement yesterday that we hired a senior vice president of merchandising who will be onboarding and ultimately lead those efforts. And that whatever we’re not able to to deal with through those negotiations, we we may need to adjust prices to our customers, and and and and you do that in order to counter the impact of any tariff related cost increases. But we are mindful of the impact on consumer behavior if the industry as a whole decides to pass cost on to the consumer or and we’ve seen the impacts of that already on costing price increases of the consumer post COVID, which has helped to kind of feed this trade down dynamic and some of the promotional activity that we’re currently investing in.

So we are evaluating what we think the full impact may be on both volume and mix and and across across the spectrum of of potential tariff outcomes. But other than that, at this point, a little too early to to give a definitive view.

Brian Nagel, Senior Equity Research Analyst, Oppenheimer: So at at this point, have you started to adjust prices or are still just looking at it?

Brian D’Ambrosia, Investor Relations, Monroe: I think we’ve been you know, if we look at at at our our prices over the last couple about couple quarters, we’ve we’ve put some price in place because of base cost increases, right, outside of tariffs. So we know that we’ve talked about mid single digit wage inflation that we’ve been contending with. So we continue to look at our opportunities to price, and we really have a robust system at which we we look at the competitive set. We look at what our primary competitors are doing, and we we make sure that we’re we’re pricing a part of them. That won’t that’ll be a consistent way that we look at the tariff increases as well.

But I think at this point, we’re still in the early days of having those conversations with our with our suppliers about any potential for increases as well as the timing of those increases.

Brian Nagel, Senior Equity Research Analyst, Oppenheimer: Got it. And then as far as, you know, again, just sticking with kind of the reposition of the business and a lot of what you’re doing here, talked about the the closing of underperforming stores to continue to work on the the the in store consumer offering. So, you know, especially from your seat as as CFO, I mean, how much investment needs to what type of investment do you think you need to put in into the Monroe organization, so to say, to support this type this this ongoing repositioning?

Brian D’Ambrosia, Investor Relations, Monroe: Yeah. You know, that that that’s been the the thing with the the repositioning is I think that it’s it’s less capital intensive in terms of dollar capital, but a little bit more human capital intensive. You know, we’re we’re really, you know, focused on being able to to to get consistency of performance across our organization. And so, you know, the ConferDrive digital courtesy inspection was an investment that we made partnering with one of our existing technology partners to to support a standardization of process across a thousand stores. Those are the types of things that we’re looking to deliver for our organization is how do we make it easier to create and to maintain and to hold people accountable to standard processes across all of our locations so we can deliver that local experience.

That being said, the capital investments of 25 to $35,000,000 that we laid out, in our last earnings call for FY ’26 is pretty consistent with what we’ve been doing historically. And it relates to some maintenance CapEx, but also some technology projects that are supportive of that standardization. But overall, I I think that the the investments that we’re we’re intending to make are are not so significant that they’re that the and the returns aren’t so long to to realize the benefits of those investments that we won’t be able to deliver adjusted diluted EPS growth in FY ’26.

Brian Nagel, Senior Equity Research Analyst, Oppenheimer: Right. Now look, the last topic I wanted is dovetails on the top top of what you said. But the last topic I wanna discuss is cash. Your your cash generation for Monroe has been a a a positive. So maybe discuss kind of the sustainability of the cash generation and then how how, you know, how you plan to deploy to the extent you have excess capital.

Brian D’Ambrosia, Investor Relations, Monroe: Yeah. Absolutely. We didn’t give a cash flow kind of goal for FY ’26 other than we said that we’ll have sufficient cash flow to meet our capital allocation priorities as well as maintain our low leverage profile. So those priorities include that 25 to 35,000,000 of CapEx I just described. It’s also we have about $40,000,000 of principal payments on finance leases as well as a $35,000,000 dividend at the current level.

So that’s about a 105,000,000 of operating cash flow needed to cover those three capital allocation priorities. We expect that we’ll be able to do that in f y twenty six and maintain that that low leverage profile on the balance sheet.

Brian Nagel, Senior Equity Research Analyst, Oppenheimer: Okay. Is is there any before we conclude, is there anything that we did not discuss that we should have?

Brian D’Ambrosia, Investor Relations, Monroe: No. I mean, I think I think the the the takeaway really is that we’ve got some some momentum in the short term here that is, you know, we’re continuing to build on and is supporting our business as we we enter FY twenty six. At the same time, we’ve got some medium to long term things that we’re working on related to the initiatives that will help support profitability as FY ’26 and and top line as FY ’26 progresses. So we feel good about living into our expectations that we laid out on the last call of of comp sales growth and adjusted diluted earnings per share growth in FY 2026.

Brian Nagel, Senior Equity Research Analyst, Oppenheimer: Great. Well, once again, appreciate your participation in our conference. Congratulations on the success here, and I look forward to continuing to watch it unfold.

Brian D’Ambrosia, Investor Relations, Monroe: Thanks, Brian. Appreciate it.

Brian Nagel, Senior Equity Research Analyst, Oppenheimer: Thank you.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.