What Happened?
Shares of auto services provider Monro (NASDAQ:MNRO) fell 17% in the afternoon session after the company reported a significant net loss for its fiscal first quarter, missing bottom-line estimates despite a beat on revenue. While the automotive service provider’s revenue increased 2.7% to $301 million, beating expectations, this was overshadowed by a significant drop in profitability. The company posted a net loss of $8.1 million, or $0.28 per share, a stark contrast to the $5.9 million net income recorded in the prior-year quarter. This bottom-line performance was driven by several factors. Gross margins contracted by 170 basis points due to higher technician labor and material costs. Furthermore, operating expenses surged, weighed down by $14.8 million in costs tied to the closure of 145 underperforming stores. The combination of shrinking margins and significant one-off charges ultimately erased the benefits of the sales growth.
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What Is The Market Telling Us
Monro’s shares are very volatile and have had 24 moves greater than 5% over the last year. But moves this big are rare even for Monro and indicate this news significantly impacted the market’s perception of the business.
The biggest move we wrote about over the last year was 2 months ago when the stock gained 36.5% on the news that the company reported impressive first quarter 2025 (fiscal Q4) results: It was encouraging to see Monro beat analysts' revenue expectations. Additionally, the market liked two aspects of the print: comments that sales in the current quarter were up a healthy 7% thus far and initiatives to close 145 underperforming stores. Overall, this was a strong quarter.
Monro is down 46.2% since the beginning of the year, and at $13.20 per share, it is trading 57.2% below its 52-week high of $30.82 from July 2024. Investors who bought $1,000 worth of Monro’s shares 5 years ago would now be looking at an investment worth $229.25.
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