Monro, Inc., a leading provider of automotive undercar repair and tire services, has released its annual 10-K report, detailing the company’s financial performance, business operations, strategic initiatives, and the challenges it faces in the competitive automotive repair industry. The report provides a comprehensive overview of Monro’s efforts to optimize operations, enhance profitability, and navigate economic challenges.
Financial Highlights
Sales: $1,195.3 million, a decrease of 6.4% from the prior year, primarily due to lower overall comparable store sales resulting from reduced store traffic and fewer selling days.
Gross Profit: $417.6 million, representing 34.9% of sales, a decrease of 7.6% from the prior year due to increased material and occupancy costs, partially offset by improved labor productivity.
Operating Income: $12.6 million, a significant decrease of 82.4% from the prior year, negatively impacted by an increase in store impairment charges of $22.4 million.
Net (Loss) Income: ($5.2) million, compared to a net income of $37.6 million in the prior year, reflecting the impact of decreased sales and increased operating expenses.
Diluted (Loss) Earnings Per Common Share: ($0.22), compared to $1.18 in the prior year, reflecting the overall decrease in net income.
Business Highlights
Business Overview: Monro, Inc. operates 1,260 retail tire and automotive repair stores across 32 states in the U.S., offering a range of services including tire replacement, undercar repair, and routine maintenance primarily for passenger cars, light trucks, and vans.
Store Brands: The company operates under several brand names, including Monro Auto Service and Tire Centers, Tire Choice Auto Service Centers, Mr. Tire Auto Service Centers, Car-X Tire & Auto, Tire Warehouse Tires for Less, Ken Towery’s Tire & Auto Care, Mountain View Tire & Auto Service, and Tire Barn Warehouse.
Store Closure Plan: In May 2025, Monro’s Board of Directors approved a plan to close 145 underperforming stores in the first quarter of fiscal 2026 to optimize operations and improve profitability.
Operational Strategy: Monro focuses on exceeding guest expectations, providing consistent value, and building a knowledgeable team. The company invests in technology and training to enhance productivity and customer engagement.
Growth Strategy: Monro aims to grow through accretive acquisitions and the addition of new greenfield stores, leveraging demographic analytics to identify high-value markets.
Purchasing and Distribution: The company benefits from economies of scale and flexibility in sourcing, primarily purchasing tires through a distribution agreement with American Tire Distributors, Inc. (ATD).
Human Capital: Monro employs approximately 7,360 people, with a focus on creating a safe, inclusive, and supportive work environment to attract and retain top talent.
Workplace Safety and Training: The company emphasizes safety and training, utilizing Monro University for comprehensive training programs and maintaining high safety standards across its stores.
Environmental Commitment: Monro is committed to environmental sustainability, recycling significant quantities of oil, tires, batteries, and cardboard as part of its operations.
Seasonality: The business experiences higher demand for undercar services from March to October and increased tire sales from May to August and October to December, with slower sales typically in January through April and September.
Future Outlook: Monro plans to continue strategic investments to enhance guest experience, optimize product offerings, and improve operational efficiency, while navigating economic challenges such as inflation and labor constraints.
Strategic Initiatives
Strategic Initiatives: The company appointed a new CEO, Peter D. Fitzsimmons, and engaged AlixPartners to assess operations and develop a plan to improve financial performance. It plans to close 145 underperforming stores in fiscal 2026 to enhance profitability. Additionally, the company is focusing on optimizing product and service offerings and accelerating productivity and team engagement.
Capital Management: The company amended its Credit Facility to provide additional operational flexibility, reducing the facility from $600 million to $500 million. It declared dividends of $1.12 per share totaling $34.9 million in 2025 and did not repurchase any shares during fiscal 2025. The company also managed its working capital through a supply chain finance program and maintained a high retention deductible plan for insurance.
Future Outlook: The company expects to generate positive operating cash flow to support business operations, pay down debt, and return cash to shareholders. It plans to fund growth through acquisitions or opening new stores, potentially using borrowings from the Credit Facility. The company anticipates continued economic pressures impacting consumer demand into fiscal 2026.
Challenges and Risks
Competitive Risks: The company operates in a highly competitive industry with competitors having greater financial resources and better name recognition, which could force Monro to reduce prices, impacting its financial condition.
Economic Risks: Changes in economic conditions, such as inflation and interest rates, could reduce consumer spending on vehicle maintenance, adversely affecting sales and profitability.
Technological Risks: The adoption of electric vehicles and advances in automotive technology could reduce demand for Monro’s traditional services, impacting revenue.
Supply Chain Risks: Monro relies on key vendors for inventory, and any disruption, such as the bankruptcy of a major supplier, could affect its ability to service customers.
Regulatory Risks: Compliance with environmental and consumer protection regulations could impose significant costs and operational burdens.
Financial Risks: The company’s ability to generate sufficient cash flow is critical, and any failure to comply with debt covenants could restrict its financial flexibility.
Cybersecurity Risks: Data breaches could result in legal liabilities and damage to reputation.
Management Strategies: Monro is addressing challenges by investing in strategic initiatives to improve guest experience and operational efficiency. The company plans to close underperforming stores to optimize its store portfolio. Economic conditions, including inflation and labor market constraints, pose ongoing challenges that could impact costs and revenues.
Market Risks: Monro is exposed to market risks such as fluctuations in interest rates, which could affect its borrowing costs. The company’s financial performance is also sensitive to changes in consumer spending patterns driven by broader economic conditions.
SEC Filing: MONRO, INC. [ MNRO ] – 10-K – May. 28, 2025