Monro Reports Second Quarter Fiscal 2027 Results Amid Challenging Automotive Aftermarket Conditions
Monro, Inc. a leading provider of automotive repair and tire services, has announced its financial results for the second quarter of fiscal 2027, ended September 26, 2026. The company reported lower sales, declining comparable-store performance and a net loss compared with the same period last year. The results reflect continued pressure across the full-service automotive aftermarket, as consumers remain cautious about vehicle maintenance spending and increasingly seek lower-cost alternatives.
Despite the challenging market environment, Monro continues to focus on improving store-level operations, strengthening customer relationships, expanding service opportunities and enhancing its financial position through operational initiatives and updated credit facilities.
Monro Reports $283.6 Million in Second Quarter Sales
Monro generated sales of $283.6 million during the second quarter of fiscal 2027, representing a 1.8% decrease from the $288.9 million reported during the corresponding quarter of fiscal 2026.
The decline was entirely attributable to a 1.8% reduction in comparable-store sales at continuing store locations. Lower customer traffic, delayed purchasing decisions and increased consumer sensitivity to prices affected the company’s performance.
Customers continued to postpone certain higher-cost vehicle repairs and maintenance activities. In the tire category, some consumers also shifted toward less expensive alternatives, putting additional pressure on sales performance.
However, Monro recorded positive comparable-store sales growth in selected service categories. Battery sales increased by 8%, while maintenance services grew by 3% compared with the previous-year period.
Other service categories experienced declines. Alignment sales decreased by 2%, tires and brakes declined by 4%, and front-end shocks recorded a 5% reduction.
These results demonstrate differences in consumer spending patterns across Monro’s service portfolio. While customers continued to purchase essential maintenance products and services, they remained more cautious about larger repair and replacement expenses.
Gross Margin and Operating Expenses
Monro’s gross margin declined by 50 basis points compared with the second quarter of fiscal 2026. The primary reason was higher occupancy costs as a percentage of sales. Lower material costs as a percentage of sales provided a partial offset.
The company also experienced higher operating expenses during the quarter.
Total operating expenses reached $97.4 million, equivalent to 34.3% of sales, compared with $90.4 million, or 31.3% of sales, in the previous-year quarter.
Several factors contributed to the increase.
Store closing costs, net of gains and losses from the sale of closed locations, increased by $6.1 million. Costs at continuing store locations rose by $3.4 million, primarily because of higher front-shop labor expenses.
Marketing expenditure increased by $3.2 million as Monro maintained its investment in activities designed to support sales and customer engagement.
The company also recorded $1.7 million in higher litigation reserve costs and $0.3 million in additional expenses related to shareholder matters.
These increases were partially offset by lower spending in several areas. Costs associated with consultants supporting the company’s operational improvement plan declined by $7.1 million.
Transition costs related to back-office optimization decreased by $0.4 million, while expenses associated with the closure of 145 underperforming stores during the first quarter of fiscal 2026 declined by $0.2 million.
Although these reductions helped limit the overall increase, higher store-related expenses and other operating costs continued to affect profitability.
Operating Income and Net Loss
Monro reported operating income of $2.6 million for the second quarter of fiscal 2027, representing 0.9% of sales. This compares with operating income of $12.8 million, or 4.4% of sales, in the same quarter of fiscal 2026.
Adjusted operating income, a non-GAAP financial measure, was $4.4 million, equivalent to 1.6% of sales. In the previous-year quarter, adjusted operating income was $14 million, or 4.8% of sales.
The reduction reflects the combined impact of lower comparable-store sales, higher operating expenses and continuing challenges in the automotive service market.
Interest expense increased to $4.7 million during the quarter, compared with $4.4 million in the prior-year period. The increase was primarily associated with higher weighted-average debt.
Monro recorded an income tax benefit of $0.3 million, representing an effective tax rate of 17%. This compares with income tax expense of $2.8 million and an effective tax rate of 32.9% in the second quarter of fiscal 2026.
The difference in the effective tax rate was primarily related to discrete tax expenses associated with share-based awards and other adjustments. The company noted that none of these individual adjustments was significant.
Overall, Monro reported a net loss of $1.6 million for the second quarter of fiscal 2027, compared with net income of $5.7 million in the corresponding period last year.
Diluted loss per share was $0.05, compared with diluted earnings per share of $0.18 in the second quarter of fiscal 2026.
On an adjusted basis, diluted loss per share was $0.01. This compares with adjusted diluted earnings per share of $0.21 in the prior-year quarter.
These adjusted figures exclude certain items and are non-GAAP measures. They provide an additional perspective on the company’s operating performance, alongside the financial results prepared under generally accepted accounting principles.
Customer Service and Operational Improvement Initiatives
Despite the decline in quarterly sales, Monro’s management highlighted the importance of its full-service automotive repair model and ongoing operational improvement initiatives.
Peter Fitzsimmons, President and Chief Executive Officer of Monro, said the company’s comparable-store sales declined 1.8% as the full-service automotive aftermarket continued to experience difficult operating conditions.
He attributed the performance primarily to lower store traffic, customers postponing higher-cost repair decisions and consumers choosing less expensive tire alternatives. The company also used self-funded promotional activities to increase unit growth in its brake category.
However, the ConfiDrive courtesy inspection process helped Monro improve average repair order growth during the quarter. The process enables store employees to identify potential vehicle maintenance and repair requirements and communicate those needs to customers.
According to management, the inspection process played an important role in generating comparable-store sales growth in batteries and maintenance services.
The company believes its full-service model provides a competitive advantage by allowing technicians and store personnel to identify vehicle requirements, explain repair options and deliver appropriate services.
Monro is also expanding the implementation of its District Manager Toolkit across its store network. The initiative is designed to improve operational consistency, strengthen management capabilities and support better execution at individual locations.
The toolkit has now been deployed across a majority of Monro’s stores. In addition, a newly established operating efficiency team is actively working with store personnel through field-based coaching and training.
Management reported early but meaningful improvements in bottom-line performance at a subset of locations where these initiatives have been implemented.
Monro also maintained its marketing investment during the quarter despite sales falling below management expectations. The company believes continued customer engagement and operational improvements will help strengthen its competitive position.
Fitzsimmons stated that the company’s initiatives are intended to improve its ability to navigate difficult market conditions. Management remains confident that the operational foundation being established today can support improved financial performance as market conditions normalize.
First Six Months of Fiscal 2027 Performance
Monro also reported its financial results for the first six months of fiscal 2027.
Sales for the six-month period decreased 3.3% to $570.8 million, compared with $589.9 million during the corresponding period of fiscal 2026.
Comparable-store sales declined 1.7%, reversing the 3.4% increase recorded in the first six months of the previous fiscal year.
Gross margin for the six-month period was 35.1%, compared with 35.6% in the prior-year period. The decline reflects continued pressure on the company’s operating performance.
Operating income represented 1.1% of sales, remaining at the same percentage reported during the corresponding period of fiscal 2026.
However, adjusted operating income declined considerably. The company recorded adjusted operating income of $6.6 million, or 1.2% of sales, compared with $28 million, or 4.7% of sales, in the first six months of fiscal 2026.
Monro reported a net loss of $3.8 million for the first half of fiscal 2027, equivalent to diluted loss per share of $0.13.
During the same period last year, the company recorded a net loss of $2.4 million, or $0.10 per diluted share.
Adjusted diluted loss per share for the first six months of fiscal 2027 was $0.09. This compares with adjusted diluted earnings per share of $0.43 in the corresponding period of fiscal 2026.
The first-half results highlight the financial impact of lower comparable-store sales and increased operating costs. They also demonstrate the importance of Monro’s ongoing efforts to improve productivity, manage expenses and strengthen its service operations.
Store Network and Business Operations
Monro closed one store during the second quarter of fiscal 2027.
At the end of the reporting period, the company operated 1,114 company-owned stores and had 47 franchised locations.
Its extensive store network provides automotive repair and maintenance services, along with tire products, to customers across its markets.
The company continues to concentrate on improving the performance of existing locations while reviewing its store portfolio and operational structure.
The closure of underperforming locations and the development of more efficient store operations are part of its broader strategy to improve profitability and allocate resources more effectively.
Second Quarter Fiscal 2027 Cash Dividend
Monro continued its shareholder return program during the second quarter.
On September 8, 2026, the company paid a cash dividend of $0.28 per share for the second quarter of fiscal 2027.
The dividend payment reflects the company’s continued commitment to returning capital to shareholders while managing its financial obligations and supporting its operational priorities.
However, the company’s credit agreement includes certain restrictions on dividend payments, subject to compliance with specified financial requirements.
Monro Secures $375 Million in New Credit Facilities
In another significant financial development, Monro entered into a new credit agreement with Ares Capital Corporation on October 23, 2026.
The agreement provides the company with $375 million in senior secured credit facilities, consisting of a $250 million term loan facility and a $125 million revolving credit facility.
Both facilities have maturity dates of October 23, 2030.
The new financing arrangement replaces the company’s previous credit facility, which had been in place since April 2019. The outstanding obligations under the previous facility were repaid when the new agreement was completed.
The new credit facilities are secured by substantially all assets of Monro and its subsidiaries. Both the term loan and revolving credit facilities carry floating interest rates.
The agreement also contains customary financial and operational requirements, including affirmative and negative covenants, financial maintenance covenants, certain prepayment obligations and restrictions on dividend payments.
Dividend payments are subject to compliance with specified financial metrics under the agreement.
As part of the refinancing transaction, Monro substantially reduced its obligations under its supply chain financing program. The company also announced that it would stop accepting new supplier obligations into the program after December 31, 2026.
As of October 24, 2026, Monro reported cash and cash equivalents of $27.3 million, along with $60 million available under its new revolving credit facilities.
The new financing structure represents an important development in the company’s financial management strategy. It replaces the previous borrowing arrangement and establishes a new financing framework extending through October 2030.
The availability of revolving credit also provides additional borrowing capacity, although the company will need to manage interest expenses, debt obligations and covenant requirements carefully.
Monro’s second-quarter results reflect the continuing challenges affecting the automotive repair and tire service industry. Consumers are becoming increasingly selective about vehicle maintenance spending, while lower traffic and greater price sensitivity are affecting sales across several service categories.
Nevertheless, the company continues to identify opportunities through its full-service business model, customer inspection processes and store-level operational improvements.
The positive comparable-store sales performance in batteries and maintenance services demonstrates the potential benefits of identifying customer requirements and communicating service recommendations effectively.
The wider deployment of the District Manager Toolkit and the work of the operating efficiency team are also expected to support improved execution across the company’s locations.
Going forward, Monro’s priorities include strengthening customer relationships, improving average repair order performance, managing labor and occupancy expenses, maintaining effective marketing activities and increasing operational efficiency.
The company’s new $375 million credit facilities also establish a revised financing structure as it works to manage its balance sheet and fund its business requirements.
Although the latest financial results indicate pressure on sales and profitability, management remains confident that its operational initiatives will help improve the company’s competitive position.
As market conditions evolve, Monro will focus on improving store productivity, delivering quality automotive repair services and maintaining its position in the full-service automotive aftermarket.
The performance of these initiatives, together with consumer demand and cost management, will be important factors influencing the company’s financial results during the remaining months of fiscal 2027.
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