Monro's Q1 2026 Earnings Call: Unpacking Contradictions in Store Closures, Margins, and Traffic Trends

Store closure strategy, gross margin projections, gross margin trends and expectations, traffic and ticket trends, and SG&A cost and control are the key contradictions discussed in Monro's latest 2026Q1 earnings call.



Store Closures and Profitability Improvement:
- Monro successfully closed 145 underperforming stores during Q1, which were expected to deliver meaningful improvement to profitability.
- The closures, along with the removal of inventory and IT equipment, will have limited impact on total sales but are expected to enhance overall profitability.

Comparable Store Sales Growth:
- Monro achieved mid-single-digit comparable store sales growth in Q1, marking the second consecutive quarter of positive comps.
- Preliminary fiscal July comp store sales were up 2%, indicating consistent comp store sales growth for the sixth consecutive month.

Gross Margin Pressure and Operational Cost Control:
- Gross margin decreased by 170 basis points compared to the prior year, primarily due to higher technician labor costs and material costs.
- The company maintained prudent operating cost control, as reflected in lower store direct costs in the quarter.

Financial Position and Capital Allocation:
- Monro ended Q1 with a strong financial position, including net bank debt of $64 million and approximately $398 million availability under its credit facility.
- The company distributed $9 million in dividends and plans to spend $25 million to $35 million in capital expenditures for the year.