Thomas Wendler

Thomas Wendler asked about the impact of Monro's digital marketing efforts on same-store sales during the quarter and the strategic rollout of digital marketing to the remaining store locations, considering operational readiness.

Answer

President and CEO Peter Fitzsimmons explained that stores receiving additional digital marketing, CRM, and call center support consistently outperform others in calls, comp store sales, and gross margin dollars. He noted that the rollout is disciplined, based on return on investment, and considers operational readiness, with all stores eventually receiving some form of marketing support.

Thomas Wendler inquired about the impact of Monro's digital marketing efforts on same-store sales in the third quarter and the strategy for rolling out digital marketing to the remaining store locations.

Answer

President and CEO Peter Fitzsimmons explained that increased multi-channel marketing (digital, CRM, call center) consistently improved calls, comp store sales, and gross margin dollars for supported stores. He noted a disciplined, ROI-driven rollout approach, with investment varying based on expected returns and store operational readiness, emphasizing the collective impact of all marketing efforts.

Thomas Wendler of Stephens Inc. inquired about the drivers behind the year-over-year SG&A improvement, the specific impact from recent store closures, and the outlook for SG&A as a percentage of revenue. He also asked about same-store sales expectations for the back half of the fiscal year.

Answer

EVP & CFO Brian D'Ambrosia attributed the improvement to strong cost control across store and corporate expenses, noting the store closure benefit was limited to one month in the quarter. He guided for flattish G&A for the remaining quarters. President & CEO Peter Fitzsimmons added that the company is focused on the positive trend of six consecutive months of positive comps and expects steady year-over-year increases.

Thomas Wendler of Stephens Inc. inquired about Monro's gross margins, specifically the impact of self-funded promotions like the DriveCard, and the forward-looking pressure from wage inflation. He also asked for details on the new customer acquisition strategy, including the profile of 'higher value' customers and the marketing tactics being used to attract them.

Answer

Brian D'Ambrosia, EVP of Finance, CFO & Treasurer, explained that the margin pressure from promotions stemmed from various tire offers and would likely continue into fiscal 2026, with a particularly tough comparison in Q1. President & CEO Peter Fitzsimmons added that the company is focusing its marketing efforts on attracting repeat customers who purchase a range of services, as they are significantly more profitable over time.

Thomas Wendler of Stephens Inc. asked how the company plans to utilize the $115 million remaining from its Term Loan B after accounting for the Breeze acquisition. He also inquired about the current premium mix for oil changes.

Answer

CFO J. Kevin Willis stated the current plan for the remaining funds is to pay down the company's drawn revolver, which increases financial optionality. CEO Lori Flees reported that the premium oil mix is around 80%, which includes both blended synthetic and full synthetic products. She noted the mix is driven by customers shifting from conventional oil and upgrading to full synthetic when they purchase newer vehicles.

Thomas Wendler asked about U.K. market dynamics, questioning whether the sales decline for luxury brands like Mercedes, Audi, and BMW in the broader market indicated a pullback from luxury buyers compared to midline brands.

Answer

CEO Daryl Kenningham suggested that Audi's performance was more related to its product cycle rather than a market trend. He noted that Group 1 was pleased with its own Mercedes and BMW business performance in the U.K. during the quarter and did not see enough evidence to make a general statement about a shift away from luxury.

Thomas Wendler asked about the potential for pre-buying to impact 2025 commercial truck demand ahead of 2027 emissions changes and sought clarity on the outlook for SG&A expenses.

Answer

Rich Shearing of North American Operations stated a 2025 pre-buy is unlikely due to regulatory uncertainty and the prolonged freight recession. Regarding SG&A, CFO Shelley Hulgrave and Chair Roger Penske credited cost controls and a focus on high-margin fixed operations for recent improvements. They guided for SG&A as a percentage of gross profit to remain in the low 70s, likely around 70-71% for 2025.