Midas says 2Q earnings tumble amid higher costs

Midas said its income for the quarter ended June 28 declined to $2.2 million, or 16 cents per share, from $3 million, or 21 cents per share, in the year-ago quarter.

Analysts surveyed by Thomson Financial expected a profit of 24 cents per share.

Revenue rose 9 percent to $48.8 million from $44.9 million.

Midas said higher costs offset revenue growth during the quarter. Additional spending resulting from turning over Midas shops to new owners, along with an expected $1.1 million reduction in European royalties, weighed on operating income lower, according to Midas.

The company said U.S. same-store sales fell 0.8 percent during the quarter, hurt by lower sales resulting from economic weakness in regions including the West and the Southeast.

Same-store sales, or sales at stores open at least a year, is an important gauge of retail performance because it measures growth at existing, rather than newly opened stores.

The company also cut its full-year sales guidance.

Shares of Midas slipped $1.69, or 10 percent, to $15.23 in morning trading. The stock has traded in a 52-week range of $12.60 to $20.94.