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ROCHESTER, N.Y., July 25 (Reuters) - Automotive repair chain Monro Muffler Brake Inc. on Thursday reported a flat quarterly net profit as sales at shops open at least a year were little changed, but gave a rosier full-year outlook.
After a slow start to the fiscal first quarter, comparable-store sales increased more than 4 percent over the past 10 weeks, the company said, prompting it to raise its earnings guidance for full-year 2003.
Shares of Rochester, New York, Monro Muffler, which operates 548 repair shops primarily on the East Coast, rose 84 cents, or 4.7 percent, to $18.58, Thursday afternoon on the Nasdaq system.
"The most encouraging thing for us is that same-store traffic was up 5.3 percent last quarter," Monro Chief Executive Robert Gross told Reuters.
Monro's strategy is to lure new customers with low-priced oil changes in hopes they'll return when they need other maintenance services, Gross said in an interview.
The company reported net income for the first quarter of fiscal 2003, ended June 29, of $3.9 million, or 42 cents per share, compared with $3.9 million, or 43 cents per share, a year earlier.
Excluding a charge for performance-based executive stock options of $1.6 million, or 11 cents per share, earnings per share were 53 cents for the quarter.
First-quarter sales rose to $67.9 million from $61.4 million in the same period a year ago. The company said sales at its stores open at least one year declined 0.1 percent in the quarter.
But same-store sales at its recently acquired Kimmel Automotive outlets increased 5.3 percent in the quarter.
Gross said acquisitions will be a key driver of future growth and said Monro will continue to hunt for smaller chains to purchase. A prerequisite for any acquisition is the business must add to earnings in the first year, he said.
"With our buying power and size, it really does create huge opportunities for us to buy 10- to 50-store chains that maybe are not getting the economies of scale that we can," he said.
Monro raised its full-year 2003 earnings estimate to a range of $1.40 to $1.44 a share from previous guidance of $1.35 to $1.40. The company also forecast second-quarter earnings of 51 cents to 53 cents a share.