Monro Q2 Sales Fall, Fiscal 2027 Comps Seen Flat to Down

Monro Inc. (NASDAQ: MNRO) reported weaker fiscal second-quarter 2027 results as lower store traffic and consumer pressure weighed on comparable-store sales, while higher occupancy costs and continued marketing investment compressed profitability. The automotive service chain said it expects full-year comparable-store sales to be flat to slightly lower from fiscal 2026.

Sales for the quarter ended in September fell 1.8% to $283.6 million from $288.9 million a year earlier. Comparable-store sales also declined 1.8%, compared with 1.1% growth in the prior-year quarter.

Gross margin narrowed by 50 basis points to 35.2%, primarily reflecting higher occupancy costs as a percentage of sales. Adjusted operating margin dropped to 1.6% from 4.8%, with adjusted operating income declining to $4.4 million from $14.0 million.

Monro recorded a GAAP net loss of $1.6 million, or $0.05 per diluted share, compared with net income of $5.7 million, or $0.18 per share, a year earlier. Excluding items including litigation reserves, operational-improvement consulting costs, shareholder-related expenses and net store-closing gains, the company posted an adjusted net loss of $237,000, or $0.01 per diluted share. That compared with adjusted net income of $6.6 million, or $0.21 per share, in the prior-year period.

Batteries and maintenance offset broader category declines

Category performance was mixed. Comparable-store sales rose 8% in batteries and 3% in service, while alignments declined 2%. Tires and brakes each fell 4%, and front-end and shock-related sales decreased 5%. Service categories accounted for about 53% of total sales, consistent with the prior-year period.

Monro held tire unit volumes flat despite the sales pressure. The company said its ConfiDrive digital courtesy inspection process supported growth in average repair orders and contributed to comparable-store sales gains in batteries and maintenance services.

Management continued to refine digital marketing and use its customer relationship management platform to target opportunities in brakes and oil changes. The company reported a year-over-year reduction in cost per lead and said oil-change promotions appeared to support better store traffic in September relative to July and August. It also recorded a significant increase in the average repair order for oil-change visits scheduled through its call center and online appointment system.

Monro maintained its marketing investment despite the weaker sales environment. Its merchandising team is also working with suppliers to improve product availability, pricing and brake assortments while evaluating additional vendors.

Store initiatives show early gains

The company highlighted early results from its District Manager Toolkit and related coaching program. A group of 146 participating stores generated mid-single-digit sales growth in the quarter and improved their bottom line by more than 20% from a year earlier. Monro also established a dedicated operating-efficiency team during the quarter to expand that work.

The company continued to dispose of real estate associated with closed stores, exiting nine leases and selling three locations during the second quarter for cumulative proceeds of $3 million. Fiscal year to date, it has exited 15 leases and sold seven locations, generating $6 million. Another 25 stores could potentially be monetized over the next several quarters.

Fiscal 2027 outlook reflects consumer pressure

For fiscal 2027, Monro expects comparable-store sales to be flat to slightly down year over year, citing continued macroeconomic pressure on consumers. Its store-optimization plan reduced first-quarter sales by $9 million.

Full-year gross margin is expected to be consistent with or slightly below fiscal 2026, depending largely on comparable-store sales. Selling, general and administrative expenses are expected to increase as Monro invests further in marketing.

The company forecasts net interest expense of $28 million to $32 million, reflecting higher interest rates and fees under new credit facilities and increased debt associated with the substantial repayment of obligations under its supply-chain financing program. Capital spending is expected to total $25 million to $35 million.

Monro generated about $4 million of operating cash flow in the first half and spent approximately $13 million on capital expenditures. It also made about $19 million of financing-lease principal payments and distributed roughly $18 million in dividends.

The company established $375 million of senior secured credit facilities comprising a $250 million term loan and a $125 million revolving facility, both maturing on October 23, 2030. The facilities carry floating interest rates and are secured by substantially all assets of Monro and its subsidiaries. As of October 24, 2026, the company had about $27 million in cash and equivalents and $60 million available under the facilities.

Monro said continued consumer weakness and lower store traffic remain key operating pressures. Its outlook is also sensitive to comparable-store sales, while floating-rate debt, higher borrowing costs and financial covenants under the new credit agreement add financial uncertainty.