Monro Muffler/Brake Executive Insights: Price Strategy, Competition
On Thursday, Monro Muffler/Brake, Inc. (NASDAQ:MNRO) reported its fourth quarter earnings and discussed the following topics in its earnings conference call. Take a look.
Bret Jordan – BB&T Capital Markets: A couple of quick questions and I guess one of them as you look at the first quarter today you talked about a minus seven comp in the seven weeks. Can you give us some color on the cadence of that was that a trend that’s improving from something worse than that or is it generally flat in April to May?
Robert G. Gross – Chairman and CEO: We’re fairly consistent. May started out worse than April, but they are all our long term investors the last four days have been a lot better.
Bret Jordan – BB&T Capital Markets: I guess if you look at price year-over-year you typically took price in April and September although it looked like you took a couple of price increases you said January and March this year. What’s the price strategy, did you take price again in April on service and what was the impact of price versus traffic on that comp?
John W. Van Heel – President & Secretary: Bret, this is John. We did take price on tires and service in March at about that 2% that we typically take it. So, we are obviously this year, price was more influential than traffic. Our traffic was down slightly through the year.
Bret Jordan – BB&T Capital Markets: I guess, if we look at the fourth quarter, the 2% tire comp, what was the unit comp I guess, because it seems like a lot of that positive was in prices opposed to the units. You look feeling for the unit transactions?
John W. Van Heel – President & Secretary: Yeah, units were down mid to high-single digits.
Bret Jordan – BB&T Capital Markets: I guess as you look at your guide on the comp this year, the zero to three, is that assuming a price increase coming in the September cycle as well?
John W. Van Heel – President & Secretary: Yes, absolutely.
Scott Stember – Sidoti & Company: Just talking to sales so far in the first seven weeks. Could you maybe talk about the individual higher ticket items such as brakes and tires, is there one that’s leading the path down or are they pretty much all down in that 7% range?
Robert G. Gross – Chairman and CEO: Yeah, it consistently sucks. The last four days, Scott are a lot better.
Scott Stember – Sidoti & Company: Could you talk about the competition, particularly on tires about what you’re seeing fourth quarter into the first quarter, have you seen any heightened competition and when you mentioned your comments about raising prices in December, was that for tires as well?
John W. Van Heel – President & Secretary: Yeah, in terms of competition the tire manufacturers have said that their units year-to-date which is calendar year-to-date are down mid-to-high single digits so we are basically in line with that. All the guys that we are looking to buy are experiencing very similar sales trend to what we are. So, we don’t see that we are losing share, we just think it is kind of (shitty) everywhere. In terms of September and the price increases, we look for whatever opportunities we have to increase the tire prices because the cost continues to rise so we would absolutely look at what we can do in September on service and tires.
Scott Stember – Sidoti & Company: So, (one must) look at the lower end of your guidance would that probably assume that you would have some trouble putting through prices on tires?
Robert G. Gross – Chairman and CEO: I am sorry, say that again, Scott?
Scott Stember – Sidoti & Company: If we were looking at the lower end of your guidance would that assume that you would have trouble putting through prices?
Robert G. Gross – Chairman and CEO: No. Don’t look at the lower end you are going to make me cry. No, I would think that either, late this year our tire sales were certainly the unit decline was compensated by collecting more for every tire and I would expect that to continue going forward. I think there is more risk in the near term on traffic and people continuing to defer.
Scott Stember – Sidoti & Company: Just last question with oil prices going up and being a headwind for you guys, could you maybe just frame out the number of oil changes that you do per year, so we can just get an idea of what’s traffic been?
Robert G. Gross – Chairman and CEO: About 2.5 million and approaching 4.5 million overall vehicles a year, 2.5 million oil changes.