Monro Posts Q2 Profit Amid Store Closures, H1 Net Loss Deepens

Ticker: MNRO · Form: 10-Q · Filed: Oct 29, 2025 · CIK: 876427

Sentiment: bearish

Topics: Automotive Repair, Tire Replacement, Store Closures, Net Loss, Operating Expenses, Restructuring, Retail

TL;DR

**Monro's Q2 profit is a mirage; the half-year loss and 145 store closures scream operational distress and a tough road ahead.**

AI Summary

Monro, Inc. reported a net income of $5.665 million for the three months ended September 27, 2025, a slight increase from $5.647 million in the prior year period. However, for the six months ended September 27, 2025, the company posted a net loss of $2.385 million, a significant decline from a net income of $11.510 million in the same period last year. Sales decreased to $288.914 million for the three-month period from $301.391 million, and to $589.949 million for the six-month period from $594.573 million. A key business change was the Store Closure Plan, approved on May 23, 2025, which involved closing 145 underperforming stores, resulting in $14.8 million of net store closing costs recorded in Q1 fiscal 2026. The company also sold three owned stores and assigned 18 leases, generating a total net gain of $7.6 million recorded in operating, selling, general and administrative expenses for the quarter ended September 27, 2025. Risks include the ongoing costs associated with the Store Closure Plan, with a remaining liability of $6.8 million as of September 27, 2025. The strategic outlook involves optimizing store performance and managing liabilities from the store closures.

Why It Matters

Monro's mixed financial results, with a quarterly profit but a half-year loss, signal a challenging period for investors. The aggressive Store Closure Plan, involving 145 underperforming locations, indicates a strategic pivot to improve profitability, but also highlights operational inefficiencies. For employees, these closures mean job losses and uncertainty, while customers might see reduced service accessibility in affected areas. In a competitive automotive repair market, this restructuring could either strengthen Monro's long-term position by shedding unprofitable assets or signal deeper systemic issues, impacting its market share against rivals like Mavis Tire Express and Discount Tire.

Risk Assessment

Risk Level: high — The company reported a net loss of $2.385 million for the six months ended September 27, 2025, a significant deterioration from a net income of $11.510 million in the prior year. Furthermore, the Store Closure Plan involved closing 145 underperforming stores, incurring $14.8 million in costs, with a remaining liability of $6.8 million, indicating ongoing financial strain and operational restructuring risks.

Analyst Insight

Investors should exercise caution and closely monitor Monro's progress on its Store Closure Plan and its impact on future profitability. Consider holding or reducing exposure until there's clear evidence of sustained positive net income and successful integration of the remaining profitable stores.

Financial Highlights

debt To Equity
1.63
revenue
$288.914M
total Assets
$1.584B
total Debt
$265.870M
net Income
$5.665M
eps
$0.18
cash Position
$10.468M
revenue Growth
-4.1%

Key Numbers

Key Players & Entities

FAQ

What were Monro, Inc.'s net income and sales for the three months ended September 27, 2025?

Monro, Inc. reported a net income of $5.665 million for the three months ended September 27, 2025, a slight increase from $5.647 million in the prior year. Sales for the same period were $288.914 million, down from $301.391 million.

How did Monro, Inc.'s financial performance for the six months ended September 27, 2025, compare to the previous year?

For the six months ended September 27, 2025, Monro, Inc. reported a net loss of $2.385 million, a significant decline from a net income of $11.510 million in the same period last year. Sales for the six-month period decreased to $589.949 million from $594.573 million.

What was the impact of Monro, Inc.'s Store Closure Plan on its financials?

Monro, Inc.'s Store Closure Plan, approved on May 23, 2025, involved closing 145 underperforming stores. This resulted in $14.8 million of net store closing costs recorded during the first quarter of fiscal 2026, with a remaining liability of $6.8 million as of September 27, 2025.

Did Monro, Inc. generate any gains from asset disposals during the quarter?

Yes, during the three months ended September 27, 2025, Monro, Inc. sold three owned stores and assigned 18 leases, generating a total net gain of $7.6 million. This gain was recorded in operating, selling, general and administrative expenses.

What is Monro, Inc.'s current cash and equivalents position?

As of September 27, 2025, Monro, Inc. had cash and equivalents of $10.468 million, a decrease from $20.762 million as of March 29, 2025.

What are the key risks associated with Monro, Inc.'s current operations?

Key risks include the ongoing financial burden of the Store Closure Plan, with a remaining liability of $6.8 million, and the overall decline in sales and a net loss for the six-month period, indicating challenges in maintaining profitability and market share.

How many stores does Monro, Inc. operate as of September 27, 2025?

As of September 27, 2025, Monro, Inc. had 1,116 Company-operated retail stores located in 32 states and 47 Car-X franchised locations.

What was Monro, Inc.'s basic earnings per share for the three and six months ended September 27, 2025?

Monro, Inc.'s basic earnings per share was $0.18 for the three months ended September 27, 2025. For the six months ended September 27, 2025, the basic earnings per share was a loss of $0.10.

What accounting pronouncements is Monro, Inc. evaluating for future impact?

Monro, Inc. is evaluating ASU 2024-03, 'Disaggregation of Income Statement Expenses,' effective for annual reporting periods beginning after December 15, 2026, and ASU 2025-06, 'Targeted Improvements to the Accounting for Internal-Use Software,' effective for annual reporting periods beginning after December 15, 2027.

What was the total amount of dividends declared by Monro, Inc. for common shares for the six months ended September 27, 2025?

Monro, Inc. declared $0.56 per common share or equivalent for the six months ended September 27, 2025, totaling $16.796 million in common dividends paid.

Risk Factors

Industry Context

Monro, Inc. operates in the highly competitive automotive repair and tire replacement market in the United States. The industry is characterized by a mix of national chains, independent repair shops, and dealerships. Trends include increasing complexity of vehicle repairs, demand for specialized services, and the ongoing need for tire maintenance and replacement.

Regulatory Implications

As a publicly traded company, Monro must comply with SEC regulations for financial reporting, including timely filing of 10-Q and 10-K reports. Any misstatements or failures to disclose material information can lead to regulatory scrutiny and penalties.

What Investors Should Do

  1. Monitor the impact of the Store Closure Plan.
  2. Analyze the drivers of the H1 2026 net loss.
  3. Evaluate the effectiveness of store optimization strategies.

Key Dates

Glossary

Store Closure Plan
A strategic initiative by Monro, Inc. to close underperforming retail locations. (This plan has resulted in significant costs and a remaining liability, impacting the company's financial performance and outlook.)
Assets held for sale
Assets that are classified as held for sale and meet specific criteria, indicating they are expected to be sold within one year. (Monro reported $11.481 million in assets held for sale as of September 27, 2025, likely related to the store closures.)
Net store closing costs
Expenses incurred directly from the closure of retail stores, including severance, lease termination, and other related charges. (Monro recorded $14.8 million in net store closing costs in Q1 fiscal 2026, impacting profitability.)

Year-Over-Year Comparison

Compared to the prior year, Monro, Inc. has experienced a decline in revenue for both the quarter ($288.914M vs $301.391M) and the year-to-date period ($589.949M vs $594.573M). While net income saw a slight increase in the most recent quarter ($5.665M vs $5.647M), the six-month period shows a substantial net loss of $2.385M, a stark contrast to the $11.510M net income reported previously. New risks have emerged due to the ongoing costs and liabilities associated with the Store Closure Plan.

Filing Stats: 4,506 words · 18 min read · ~15 pages · Grade level 14.2 · Accepted 2025-10-29 07:55:22

Key Financial Figures

Filing Documents

FINANCIAL INFORMATION

PART I. FINANCIAL INFORMATION

Financial Statements (Unaudited)

Item 1. Financial Statements (Unaudited) Consolidated Balance Sheets 3 Consolidated Statements of Income (Loss) and Comprehensive Income (Loss) 4 Consolidated Statements of Changes in Shareholders' Equity 5 Consolidated Statements of Cash Flows 6

Notes to Consolidated Financial Statements

Notes to Consolidated Financial Statements 8

Management's Discussion and Analysis of Financial Condition and Results of Operations

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 16

Quantitative and Qualitative Disclosures About Market Risk

Item 3. Quantitative and Qualitative Disclosures About Market Risk 25

Controls and Procedures

Item 4. Controls and Procedures 25

OTHER INFORMATION

PART II. OTHER INFORMATION

Legal Proceedings

Item 1. Legal Proceedings 26

Exhibits

Item 6. Exhibits 27

Signatures

Signatures 28 Monro, Inc. Q2 2026 Form 10-Q 2 Table of Contents CONSOLIDATED FINANCIAL STATEMENTS

- FINANCIAL INFORMATION

PART I - FINANCIAL INFORMATION Ite m 1. Financial Statements Consolidated Balance Sheets (thousands, except footnotes) (unaudited) September 27, 2025 March 29, 2025 Assets Current assets Cash and equivalents $ 10,468 $ 20,762 Accounts receivable 11,788 11,752 Federal and state income taxes receivable 4,113 3,992 Inventory 160,681 181,467 Other current assets 55,785 59,426 Total current assets 242,835 277,399 Property and equipment, net 240,655 258,949 Finance lease and financing obligation assets, net 152,923 159,794 Operating lease assets, net 174,138 181,587 Goodwill 736,435 736,435 Intangible assets, net 9,039 10,390 Assets held for sale 11,481 — Other non-current assets 16,500 17,269 Total assets $ 1,584,006 $ 1,641,823 Liabilities and shareholders' equity Current liabilities Current portion of finance leases and financing obligations $ 38,733 $ 39,739 Current portion of operating lease liabilities 39,717 40,061 Accounts payable 298,966 322,642 Accrued payroll, payroll taxes and other payroll benefits 21,568 23,599 Accrued insurance 57,991 52,822 Deferred revenue 13,947 14,696 Other current liabilities 40,288 30,731 Total current liabilities 511,210 524,290 Long-term debt 60,000 61,250 Long-term finance leases and financing obligations 205,870 220,783 Long-term operating lease liabilities 156,723 167,523 Long-term deferred income tax liabilities 37,239 37,111 Other long-term liabilities 11,279 10,105 Total liabilities 982,321 1,021,062 Commitments and contingencies - Note 9 Shareholders' equity: Class C Convertible Preferred stock 29 29 Common stock 401 401 Treasury stock ( 250,111 ) ( 250,111 ) Additional paid-in capital 259,735 258,804 Accumulated other comprehensive loss ( 3,404 ) ( 3,421 ) Retained earnings 595,035 615,059

Notes to Consolidated Financial Statements (unaudited)

Notes to Consolidated Financial Statements (unaudited) Note 1 Description of Business and Basis of Presentation 8 Note 2 Divestiture 10 Note 3 Earnings (Loss) per Common Share 10 Note 4 Income Taxes 10 Note 5 Fair Value 11 Note 6 Cash Dividend 11 Note 7 Revenues 11 Note 8 Long-term Debt 12 Note 9 Commitments and Contingencies 13 Note 10 Supplier Finance Program 13 Note 11 Equity Capital Structure Reclassification 13 Note 12 Segment Reporting 14 Note 13 Related Parties and Transactions 14 Monro, Inc. Q2 2026 Form 10-Q 7 Table of Contents CONSOLIDATED FINANCIAL STATEMENTS #x200e NOTES Note 1 – Description of Business and Basis of Presentation Description of business Monro, Inc. and its direct and indirect subsidiaries (together, "Monro", the "Company", "we", "us", or "our"), are engaged principally in providing automotive undercar repair and tire replacement sales and tire related services in the United States. Monro had 1,116 Company-operated retail stores located in 32 states and 47 Car-X franchised locations as of September 27, 2025. A certain number of our retail locations also service commercial customers. Our locations that serve commercial customers generally operate consistently with our other retail locations, except that the sales mix for these locations includes a higher number of commercial tires. Monro's operations are organized and managed as one single segment designed to offer to our customers replacement tires and tire related services, automotive undercar repair services as well as a broad range of routine maintenance services, primarily on passenger cars, light trucks and vans. We also provide other products and services for brakes; mufflers and exhaust systems; and steering, drive train, suspension and wheel alignment. Basis of presentation The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with the rules and regulations o

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