Monro, Inc. (MNRO) Earnings Call Transcript & Summary

Pleased to have management from Monro here with us today, including Mike Broderick, President and CEO; and Brian D'Ambrosia, Executive VP and CFO.

So I'm going to just to maybe start off, Mike, I'd love to get a kind of walk-through of Monro's consumer demographics and how you guys are seeing the health of the consumer because that's been a big focus today.

Yes, sure. Just to be really clear, our consumer is dual income under $100,000. I would say that consumer right now has been very value conscious, and that's what we've been driving. It's how to bring value to life at Monro. And it starts with how we communicate it. So not only is it just lower prices or better value or promotions, it's also better quality of work. And that's why we're so focused on some of the big initiatives when I talk about promotions, but also the inspection process. We need to communicate great value, but great work at the same time. That's what our customers demand.

And the auto aftermarket in general is pretty fragmented. What do you think is going to happen from here from a consolidation standpoint?

Yes, I can take that. I think as we look at the more recent activity, it has slowed down a little bit over the last year, 2 years. And I think some of that has had to do with expectations of buyers and sellers being a little bit of a gap between the two. But that doesn't change the overall dynamic, as you mentioned, of a highly fragmented industry. There's over 100,000 auto service aftermarket locations. The top tier really only the top 10 only have about 15%. So we think the consolidation is going to continue in the industry. And over the longer term, we believe it's going to be a big part of Monro's growth as well.

And aside from this consolidation trend, how has the competitive landscape for tires changed over the past few years? And what do you think differentiates Monro from the other players in the space?

Yes, that's a really good question. Coming out of COVID, I would say that there was a shortage of availability. So the whole industry literally went to whatever you had put on my car. Then -- so brands didn't matter, new product was introduced. And for the last 4 to 5 years, I would say, there's been a significant shift to what we call Tier 4 private label. And it used to be in the teens with regards to overall market share, and there's generally 4 tiers of tires. It's shifting down, and I would say the macro economics is contributing to it. The value that those Tier 4 tires are providing the customer is pretty good. So the customers are okay choosing it. And I would say it's putting a lot of pressure on the marketplace for sure. How do we navigate a shifting a shifting -- I would say a consumer is looking for value, just like I talked about, and also they're not seeing a discernible difference between Tier 1 and Tier 4. At the same time, I think -- and this is where I'm very vocal about the accountability of our manufacturers at the same time. They've been putting costs into the marketplace. So they have been driving up Tier 1 and Tier 2 prices in the marketplace. And, at the same time, Tier 3 and Tier 4, were lowering their prices. So the gap between Tier 1 and 2 was even greater with regards to Tier 3 and 4. So I think that that's coming out of COVID. That's not natural. It's not the best thing for our consumer. I would say that it's going to shift more back to normal, where Tier 4, private label, entry level is going to go back to, I would say, back to 20% of the consumer preference. From where it is now at 30%. And I would say Tier 1 and Tier 2 would start getting back some of the market share. Because the manufacturers are going to have to address their cost and they're going to have to invest in people like ourself, making sure that those brands are represented in the screen. A lot of change over the last 5 years, put a lot of pressure on distribution, retail, put a lot pressure across the board, and that needs to be addressed very quickly.

And for each of the four tiers of tires, with regards to tariffs, how do you think Monro and the different tire tiers are going to be impacted?

Yes. Just so that -- it was complicated, now it even got more complicated. There's only one North American manufacturer, and that's Goodyear. We have a really strong relationship with Goodyear. Although they don't manufacture all their tires in the U.S., they do use most of North America to produce their tires. Everything else is actually low-cost country. Not necessarily China, but other countries where they are tariff-driven or they will be affected by tariffs or not. I would say, at this point in time, I see it from Monroe, and that's probably the only thing I can comment, it's a positive. I have a great relationship with the North American supplier, especially in the U.S. The Tier 4 tires, which are mostly manufactured in low-cost country, including China, are going to get more expensive. So now all of a sudden, there could be that value gap, which I just talked about, Tier 1 through 2 through 3 - 4 that might close. And I think then the customer will see, "Hey, look, I'm going to choose a better tire. It's better for the ride, it's quieter, it lasts longer. I'm going to make that investment, oh, and by the way, the gap isn't as large.

All right. I'm going to shift over to batteries, which I think were pretty strong in the third quarter. Can you remind us what you guys have been doing there? And how sustainable that kind of growth is?

It better be sustainable, [ Robbie ]. This all goes back to the Confidrive process. That's our inspection process. Just to remind everybody, every retailer in the service business has an inspection process. You bring in your car, there's a minimum expectation. Valvoline has an 18-step inspection process. You go to the dealer, they have an inspection process. What we have done over the last 3 years is we've built, I believe, a best-in-class scalable inspection process, moving from paper, or the dark ages into the new world, which is all tablet-driven all electronic, all managed centrally. As a result of that, I now know how well our team - right down to the individual - are properly inspecting that vehicle. As a result of that, categories like batteries, ride control, they're all going positive because now I can actually see whether or not that person's doing that proper inspection. Whether or not they're communicating to the customer that, hey, look, your car needs brakes, your battery is failing. These are all things that in the past, I didn't have oversight. Now I have everyday oversight, and I'm going to reward it with -- not only am I getting rewarded, but most importantly, the customer is getting rewarded with a better, more trusted experience. And it's all brought to them digitally, where I can e-mail it to them. I can text it to them. I can show them pictures, I can show them videos of why they need to take action on their vehicle. And I'm really excited about it. Batteries has been a breakout. I would say we still have more work to do on brakes. I called back in our November quarter, I said we're going to get our brake business back all through the Confidrive process.

I think another thing you talked about was, I think, there were roughly 300 or so small or underperforming stores that had started to improve. Can you remind us what you guys were doing there and where that can go? Can you get to double-digit comps there or. . .

Yes, absolutely. We had called these stores out a few quarters back as opportunities for outsized comp growth. And we were up about 250 basis points relative to the chain in this past quarter. But still we believe that we've got opportunities for much more significant outperformance. What drove it in the current quarter is that these are smaller sales stores, so their sales levels are lower. So as tires -- entire units picked up in the quarter, they had outsized disproportionate benefit to that higher ticket category. But that needs to continue and should continue. We still expect those stores to be double-digit growers in supportive of our overall comp store sales moving forward.

Given that consumers are pressured, we've been hearing about different maintenance a lot. How much of what Monro does would you consider being discretionary versus their required maintenance? And then as it relates to tires, how long can consumers actually defer a tire placement?

Yes. Really good question. [indiscernible] go back and I'm going to answer it with the battery. When batteries fail, it's catastrophic. They just stop. Your car doesn't move forward. We have testing equipment part of the inspection process is to give them an -- give our customers an understanding of the state of the battery. Now let's talk about tires. Tires, you have visible wear. You have -- we have -- there's industry standards to be able to communicate. It's all about communicating to the customer, all about doing a proper courtesy inspection, making sure the customer understands it, their tires are in a state of repair, whether it's good, bad or indifferent. They're a state of repair. On the service categories -- and it's easy to see if tires -- they have wear bars that you can have like -- the metal could be sticking out. These are all easy ways to communicate to a consumer that they need tires. And generally, customers take action on it. Now let's talk about going inside the tire, meaning inside -- when you're looking at brakes, these are all items that customers, including everybody in this room, including myself, do not look at every day, checking out their brake pads. That all goes back to the inspection process. That's industry standards. We have micrometers. We actually measure the brakes. We have to communicate that to the customers of how long those wear patterns generally take before their car no longer is as safe as it is today. It all goes back to the inspection process. And then last but not least, when I talk about how excited I am about the inspection process and the courtesy inspection, which we call Confidrive, I can take pictures. And I can show customers, here's the state of your disrepair or repair of your vehicle. Or your car is in completely -- it's green across the board. And thanks for keeping your car maintained so well. I would say that is where the industry is going. Just to remind everybody, that is what is the breakdown in the trust of the automotive aftermarket. Everybody thinks they're being sold something. And I would say, starting with the OE now moving into the original equipment manufacturers and moving into the aftermarket. The process -- having a sales process. This was a massive undertaking over the last 3 years. We just put it in place in April. We're really starting to say, "Hey, look, we can see it. We can see the attachment that goes along with it." And it's good for the consumer also because we're driving trust. We're driving a better experience with our customer, which I think overall helps us. When you look at share of voice, I want that share of voice. That you can come to a Monro brand, and they're going to do a great job. Oh, and by the way. They give you the information to make a great decision about [indiscernible], their vehicle -- your vehicle.

In your fiscal third quarter, you had some gross margin pressure. Could you walk us through the rationale of why you chose to increase self-funded promotions for tires? And if you've seen the results that has been meeting expectations. And then also, maybe you could touch on how vendor-funded promoters are trending?

Yes, absolutely. So we did see pressure in the quarter. We saw about 120 basis points of gross margin decline year-over-year, that was driven by 150 basis points of material margin pressure offset by some productivity gains on the technician labor side. But that 150 basis points was entirely due to tires. And within tires, we did talk about increasing our self-funded promotions. That was really in response to the demand environment and for us to continue to attract consumers into our stores for tires, as well as to make sure that we were holding our screen. We've been very committed to Tier 1 through 3. As Mike talked about the tiers earlier as we deliver higher ASP and higher margins in those tiers, even with the promotions, than we would in the Tier 4. So it has been important to make sure that those were -- the consumer was supported to be able to buy Tier 1 through 3 tires. And we saw it in units in the quarter. So we did get what we wanted from it. We went positive in tire units for the quarter. And ultimately, we're going to continue to make the price and promotions investments that we need to, to be able to continue to grow tire units, and we think that ultimately benefits all of our service categories. That's more cars for us to witness and provide a digital courtesy inspection to and look to offer the consumer other services their vehicle might need.

I'm going to switch to a topic that's -- in other areas has been -- can you remind us weather and how weather impacts Monro's business? And -- and maybe when we think about there was some weather things in February, colder weather coming back in January, I think can you sort of walk us through how that affects you guys?

Although, we -- yes, I'll be glad to take this one. We've not had weather for the last 3 years. You probably heard that from every other retailer. It's -- weather it's short-term pain, long-term gain. I would say that there's pot holes that's, in a very sick way, it's great for our business. Tires get blown out. . .

That's sick, I just bought my tires.

Did you? So, I would say that you get the pothole meter, somebody starts producing that, right? They don't fill it in. It's good for the business. Now, I don't like snow in Florida. I guess that's what we had snow in the Carolinas. I didn't like that. That was very disruptive during January and February, but long term, that's good. Those customers stop buying. So there's a lot of volatility. When that happens, they just hole up rather than in the Northeast and the Midwest where they're used to it, they still shop. So that volatility, I absolutely recognized in January where we had some weather. But overall, it's good for trend. It's good for business. It just gives them another reason to come back and get their car serviced. And when we've been talking for many years right now, or at least the last 2 years, the deferral cycle of tires, and just -- customers are just [indiscernible] until -- our customers are at least just waiting to a point where they need to change the tires, I would say that, that's another reason to come into a shop like ours to get their tires replaced. And at the same time, we take a look at their vehicle.

And then you've touched on Confidrive, the digital courtesy inspection. Can you sort of walk us through the how long that this could be a driver for? And maybe start at the beginning of it and then how it's performing versus your expectations developing this? How does it compare to the competitions versions of this, maybe just paint a broader picture with a timeline would be fantastic.

Both of us can have this presentation, but I'm going to take advantage of it because I just love it. First of all, the aftermarket was slow to adopt. OE, I would say, went digital. It's really important. We've always had inspection processes all on paper, I couldn't read the writing. You weren't proud of actually communicating to a customer that this is what your inspection looks like. And I would say most good retailers have an inspection process. Most retailers have it in -- on a paper form. Only, I would say, some OEs have invested in moving everything digital and some aftermarket competitors have moved it to digital. I would say ours is scaled. Everything is -- you can see everything across our organization. We have one point-of-sale system, everything is easily accessible no matter what your -- store you go to. It ties to Carfax, these are all things that we've really developed, I would say, a connected environment. All on behalf of our customers so that they understand we're a really reputable shop. I would say I underestimated the change management that goes along with this. We put the customer first. We put the teammate probably second, and they definitely voice their opinion about that. We took control of the back shop when we rolled out this Confidrive the digital courtesy inspection process, and it was a lot of change management that we had to put in place along with it. I underestimated that. I would say without question, 6 months, minimum. We tested it. We rolled it out slowly. We deployed it. We did all, I believe, best-in-class project management. But yet when we fully deployed and then we started setting expectations in April of '24, we had a lot of pushback. It took us 6 months to really start getting, I would tell you, material gains in our business across more categories than just batteries. And now I'm starting to talk about everything is starting to come positive as a result of it. And it's all about taking control and working with the team, training with them. But I would say I'm extremely proud of where we are right now, but we had a lot of disruption in the first 2 quarters, as a result of probably the largest change management system that I've ever been part of. But I like where we are now.

I would just add to that, too, that as far as the continuing benefits not only into FY '26 where we really didn't start to see the ultimate benefit in that year until the back half once Mike said we got through the change management. So there's still time to lap all of that in '26. But then continuing on, we continue to optimize the tool, optimize the process, certainly continue to bring everybody along with it. And then the real benefit then kicks in where there's decline work that happens that doesn't always get done that day. You find something that a guest may need, but they may decline it. And so it starts to build into a little bit of a loyalty program, not so much from a financial incentive but we're sending you screenshots of your courtesy inspection on a postcard or an e-mail saying, "Hey, remember this finding we had. It may be giving you trouble right now, why don't you come back in and here's an offer for us to be able to help you with that." So leveraging it in CRM as well after the fact.

And following up on the Confidrive digital inspection process. Could you talk about what kind of labor investment you've made for Confidrive? And overall, how do you think about the supply of labor specifically as it relates to skill technicians?

Yes. I think that during the burn-in period of it, certainly, there was the learning curve and the productivity impact that I would expect, both in our front and our back shops. But -- as you can -- we talked about earlier with the gross margin, we still were able to leverage our back shop to 30 basis points of leverage. In the front shop on our last earnings call, we talked about adding some additional resources on the front to support that educational selling process. It is a little bit different with the tablet, and we wanted to make sure that there was adequate front shop support for them to not only do everything else they do, but also give their full attention to the inspection education process with the guest, whether that's happening on the phone, with the guests having an e-mail in front of them or whether it's happening in person off the tablet. So we added that labor. What we expect is to keep that support at the front shop intact, but we'll optimize and expect that a learning curve also exists on the front shop that we'll be able to, at some point, start to maybe pull back on the level of investment that we saw in Q3.

I believe you have a target of returning to a low double-digit operating margin. Could you walk us through what kind of margin expansion opportunities you have from the current level?

Yes, absolutely. So the biggest piece for us is going to be fixed cost leverage, right? So we -- one, in our goals are to deliver a mid-single-digit top line growth to really leverage not only the occupancy costs that reside and are fixed in our cost of goods, but ultimately to leverage our G&A as well. Our G&A, we've been able to hold relatively flat over the next -- the last few years. We put in place back office optimization, some offshoring, some outsourcing that's allowed us to hold those flat, but we've still seen with some negative comp pressure our G&A as a percent of sales tick up. So we can reverse that and move our way back towards the double digit with first with leverage off of a growing top line against those fixed costs. Second is variable margins. We've talked a lot about our ConfiDrive, and that's really there to support our courtesy inspections, driving our oil traffic and our tire traffic into those other higher-margin services. So variable margins is another opportunity for us. And then finally, I think if you look at tires, the pressure has come from tires and ultimately, we need to see the pressure subside from tires to ultimately reach our operating margin goals. And that's going to require, we believe, continued focus by us to make sure that we have the right promotions on but aren't also overpromoting and that we're walking that balance between volume and price. And also, we likely would need the benefit of a consumer environment where the consumer is moving back to more traditional buying across the screens like Mike had talked about earlier.

Okay. I cover Walmart and Costco, so I have to ask this question. So Walmart specifically, I think, has been offering -- through their 3P marketplace, but also coordinating, I think, ship to the store. Offering brands like Firestone and Goodyear and Michelin where I don't think they trafficked in very much in the past. And then Costco seems to be trying to grab share in everything these days also. So how do you guys answer this question -- these questions?

So I feel like we're very competitive and we'll stay very competitive with our promotions. I think Costco and Walmart do a good job. So I would say we're full service, and that's a differentiation. So they go to Costco, then they come to us for an alignment. And they go to Costco and then they come to us for other services that may or may not be identified. And so I look at them as potentially feeder opportunities rather than competitors because of just our marketplace. And we -- that's what I'm most excited about is the fact that we fix cars. Like, when a car comes in, we have the skills, knowledge and ability in our back shop to fix cars properly. And I think that's something that we can compete with. And by the way, we do sell tires. We're extremely competitive on those brands, and we're going to stay competitive in order to keep that value proposition alive and well, regardless of the competitor.

That's helpful. And then I know you guys have a partnership with Valvoline, I think with an automatic rebate coupon and can you walk us through your partnership with Valvoline? Is that the only thing you have and what you guys are doing there?

Yes. So we sell millions of gallons of Valvoline. So I would say that they are invested in us, especially with the divestiture. They are now singly focused on companies like ourselves. And they've invested a lot to make sure that we bring better value. In the past, we talked about $10 coupon in order to incentivize the customer to come in. Now it's up to $20 coupon, all funded by the vendor. And these are the things that I would say, scale. Scale still matters in this industry. These are the things that we're able to bring to our consumer. So we like the partnership without question, it's a quality product. And it's our job to continue to start growing that category, and reversing, I would say, multiyear trends. And that's with promotion, that's with just better service, doing the proper things for our consumers. And I would say Valvoline is helping us.

How are you preparing for the longer-term impact of electrification of vehicles? I'm sure you get this question pretty often for both the tire and service segments.

Yes. I can take that. I mean, as we think about electrification, one of the -- the primary category that obviously you think about as being in jeopardy is kind of what we just talked about, that oil category, that fluid exchange. But remember, there are over 300 million vehicles in the auto aftermarket, and they are not going to change overnight. So there will be a large market for continued fluid exchange as electric vehicles start to make their way into the aftermarket. And moving into kind of offset some of that maybe sales pressure or risk is really the tire category. And the tire category because these vehicles are heavier and they also have more torque, and they tend to be harder on tires and wear them out in a materially faster way. And so we are going to be seeing those vehicles more often for tire and tire services. And then at the same time, there are other opportunities in electric vehicles that can provide additional categories for us, right? We may not be doing battery replacement, but there are certainly battery components, coolant, hoses, clamps that get warehouse a lot of the battery cooling is provided to the battery compartment to keep those batteries cool, and we'll be able to move into those services as well. But at this point in time, we are seeing electric vehicles across our service base, a lot out in California. If you're drive in any one of our California stores right now, I'm sure there'll be an EV on the lift. And all of our technicians nationwide are trained on how to properly lift a Tesla, lift an electric vehicle and perform the needed services that we can provide on that vehicle.

I think if you were a customer in this room and you had an EV, they're brutal on tires. I mean, I think that's all upside. The cooling system on it, too, is all upside. So I would say we're agnostic, as long as people are driving If it's an internal combustion engine or it's EV, we're okay.

Monro has a portfolio of many different tire and auto services brands. So I'm curious if you could speak to the benefits and challenges of operating so many brands within your Monro portfolio?

I'll take that. From a brand perspective, it's really important to understand all the work that we've done, all the customer feedback, that they are loyal to the local tire choice in the marketplace. So we have a tire choice right down the road. They're loyal to tire choice. They don't know about Monro. Although now I'm starting to say, "Hey, tire choice by Monro" on the invoice, that's as far as we're going with it. Until -- we probably will get down to two or three brands, but I'm in no rush to do that. What I'm going to rush to do is continue really focusing on a better guest experience, better teammate experience, making sure I have the best people working for me because regardless of the brand on the outside of the door, that's who they're going to buy from are those people. And how do I give them tools to do their job. And we can do -- and I would say this is not something that I take lightly. I can do a lot of tests by brands. And I learn a ton when I have these brands that I can activate separate, and I can really start engaging the customer in a different way. So I'm learning a lot even with the multiple brands. So there's a lot of reasons why we're not moving fast to really move into fewer brands. We're really focused on the in-store experience, for sure.

And then can you remind us your sort of unit growth outlook for the portfolio brands and what makes you choose building and what the M&A environment looks like?

Yes, I can take that. I think that if you look -- we'll start with the longer term. If you look over the long term, to my comment earlier, unit growth will be a continued big part of Monro's growth algorithm. It has been historically. We've taken a little bit of a pause over the last couple of years to put tools in place like Confidrive and others for a platform that we feel like we can go on Monro's next journey of unit growth from. So we've taken the time to kind of consolidate some of the gains that we've had in the past, and really focused on a scalable operational platform that will benefit us as we fill in a lot of white space in a map that has a lot of attractive markets that we're not in, as well as opportunities to fill in markets that we are in that just don't have the density that we would like to have. So the good thing is, over the last couple of years, as I've said, the M&A market has slowed down in the aftermarket. And we really haven't missed out on anything that we would have wanted to participate in for having been a little -- participating less in that, and we feel that the amount of fragmentation in the industry and ultimately, our balance sheet, that we'll be able to put to work will reward us with the ability to grow units going forward.

And then I wanted to go back towards the beginning of this conversation. I think [ Vicki ] had asked this question about tire pricing and tiering -- and you talked -- got very wide -- but I'm just -- I'd love to just understand why the vendor partners -- how did this happen? Where their -- were they pushing price on the luxury or the higher price point end of the market because they had to? Or were they pushing price because they could? Or what kind of happened there? And then I love the continuation because I think you mentioned that you expect sort of somewhat of a reset -- is there a historical reason that, that's happened? Or I'd love to just get more insight into this. I thought it was very interesting.

Yes. I think coming out of COVID, there was a scarcity of supply. So when people have a scarcity of supply, they are more courageous to take price up, right? And then they never reset. And they left the door open for them to really, I would say, lose significant market share from lower-cost providers that are aggressive trying to get North American -- get into the North American market. And the gap between -- and they were very aggressive putting price in the marketplace. And then the gap -- the value proposition was not that far and the price proposition was significant. And I would say that going back to May, I called that out to say we're going to go get our tire business back with promotions, with our vendors funding it. If not, then we're going to make choices. But I would say coming out of COVID, multiple years of cost increases, price increases. And then we have our consumer that is looking for better value, I would say that, that gap, that was a significant miss. And I would -- and we waited too long. Monro waited too long. And when we inflect it, is when we put price in when we started getting aggressive, we were starting to get our customers back. And just to remind you, coming -- I mean coming out of this quarter, the first quarter, we were down 10%. And I would say, I was embarrassed by 10%, all driven by tire, but it is a gateway for other customers, other services, too. So we declared we were going to get our business back in May. We started seeing the trend improve, when we announced our earnings in August, we say, look, the trajectory is improving. We're going to continue focusing on that. We're also going to focus on our service categories that go along with it. And the last quarterly earnings call, we talked about is how do we get our customers back. So when I look at our year, we've had 500 basis points improvement quarter-over-quarter-over-quarter. But I have to look myself in the mirror to say, how do we get in a position where we were down 10%? And without question, I'm holding myself accountable to it and also my manufacturer partners because they need to now step up. They need to reset. They need to get their market share back and they need to help us, obviously, get those customers back into our stores selling their product.

That was very helpful. Let me just pause for a second, any questions in the audience out there?

Actually, I have two quick ones. A follow-up on what Robbie was asking about the weather piece. So I know you mentioned there was some disruption in the South which makes sense. But does the winter weather have a large impact on your business and like regions that have winter given like winter tire sales, or snow tire sales, I should say, like does that have any meaningful impact on your business?

Yes, very much so. When you have less -- they are on the fringe, they don't work well in snow regardless. They're not winter tires. They're all weather right now. But if you don't have the necessary -- the rubber that -- available, then a snow event will cause you to drive -- I would -- it would be tough to drive in it, for sure. So it will force the consumer, even in the north, to come in and get new tires. That is a good event. One to three inches of snow wherever it is, especially in the North, is a great event for us.

Got it, thank you so much. And then, again, following up on the question that was asked about the different tier penetrations of tires. Do you find -- at the lower tiers, are you seeing much quicker replacement cycles on those tires as, I would assume, they would wear out faster. So, is that maybe an opportunity that those customers may reenter the market quicker?

I don't have enough industry data, but this is what we do know. They're louder and they don't perform as well with syndicated data supporting it on what traction. So they're less safe as compared to some of the Tier 1 and Tier 2 tires that do do the necessary testing of the engineering that stands behind it. So the newer technology. I would say these are -- generally the Tier 4 are lower miles warranty. They're generally -- they were between 40,000 and 50,000 miles compared to a Tier 1 and Tier 2 more all season is anywhere between a 60,000 and 80,000 mile tire. So with that being said, they should wear out more -- they should wear quicker.

Got it. That makes sense. Maybe if I could sneak one more in. For EVs, are there any specialty tires that I think -- I may be completely wrong on this, but I think Tesla may have foam in their tires or something like that.

They do.

Do you carry those types of specialty tires to service that market?

Yes, we do. And the foam is noise suppression. So that's the reason why EVs, they want decent tires on it because you don't want to hear a lot of tire noise. And, oh, by the way, if you sell them a bad tire, even though it's a good tire and it's going to work fine on it, they don't like you and they don't come back for other services. So we have to be really mindful of how do we educate the consumer to say, you're probably not going to like that. And the reason why it's going to perform fine, just going to be louder

Aside from -- so we've talked about your Confidrive strategy and also the Valvoline rebate. Aside from those two, do you have any other marketing initiatives that you have or will be implementing to drive both ticket and traffic.

I'll take it and [indiscernible]. Those 300 underperforming stores we're going to fix those things. Double-digit comps year-over-year-over-year. They used to be good stores. That's a growth vector for our organization. I would say that's our #1 focus. #1 focus there. #2 focus is ConfiDrive, #3 focuses on my teammates. I need great technicians in order to do great work. And the last thing I want to have is since we're inspecting the car better, I want to be able to fix it the first time. And I think that's what I get -- those type of services that I get rewarded with loyalty. And that's what we're trying to do in 1,250-plus stores across 32 states.

And I think that's the important part to really recognize about our business model is, it is about oil and tires and those are traffic drivers. So the promotions on oil the partnership and the promotion with Valvoline that we talked about. Those are key traffic drivers for us to convert into those other services. So when we tend to do is we tend to market for new customers against those two categories. And then with the other categories like I talked about earlier, it's more customer relationship marketing for services, you might have declined on past visits for those other categories.

And with 1 minute remaining, I guess, could you share your thoughts on how the industry outlook could play out for the next 1 or 2 quarters and maybe next year or so?

I don't have a crystal ball in the next 1 or 2 quarters. It's a great industry. I've been in it for 35 years. This is a great industry. We have its ups and downs, but for the most part, it grows nicely mid-single-digits -- low-single-digits. I mean, it's a great business. We fix things, which creates value for our consumers and also we employ people who love cars. So it's an industry that I would say is going to be here with 280 million-plus cars that are driving, I would say, back to pre-COVID vehicle miles traveled. So everything is looking better. I would say, I would like a little healthier consumer, but if I don't, I'm going to still go get the business because it's -- that's what it's going to require going forward for the next, I would say, foreseeable future.

Well, we're out of time. That's a great way to finish. I want to thank Monro management for attending the conference today.