Monro (NASDAQ:MNRO) delivered a sharp increase in third-quarter net income on Wednesday, though the results were heavily influenced by one-time gains from a major real estate overhaul.
The Fairport, New York-based company reported net income of $11.1 million, or $0.35 per share, more than doubling the $4.6 million posted in the prior-year period.
The profit spike was primarily fueled by $14 million in net gains from the sale of properties related to its massive 145-store closure initiative launched earlier this year.
While total revenue dipped 4% to $293.4 million due to the smaller store count, comparable store sales from continuing locations grew 1.2%.
This performance was led by strong demand in "non-discretionary" categories, with front-end and shock services jumping 7% and tire sales increasing 5%.
Despite the GAAP beat, adjusted earnings—which strip out the real estate gains and restructuring costs—fell to $0.16 per share from $0.19 a year ago.
Meanwhile, the company’s "Operational Improvement Plan" continues to incur significant costs, including $4.7 million in consultant fees during the quarter.
However, these investments helped drive a 60-basis-point expansion in gross margin, as lower occupancy and material costs successfully offset rising technician wages.
The company also remained aggressive in its capital allocation, paying out a $0.28 per share dividend during the quarter.