Monro (NASDAQ:MNRO) stock surged on Wednesday after the company notched better than anticipated quarterly sales.

For its fiscal third quarter, the New York-based automotive undercar repair and tire services company posted $0.43 in earnings per share, in-line with expectations. Meanwhile, $335.2M was a smaller deceleration than the expectation on Wall Street. Comparable store sales rose 5.6% in the quarter, well above the 3.3% consensus estimate.

While gross margins contracted 150 basis points from the prior year, management indicated that consumer trade down is benefitting sales. Management commentary suggested the trend has allowed the company to gain market share.

“We actively repositioned our tire assortment to give our customers the right tire at the right price,” CEO Michael Broderick told analysts. “We are staying relevant on opening price points to provide customers with more choice and greater value. In preparation for the winter selling season, we raised in-stock levels in our stores with an expanded snow tier offering, a more established regional inventory for opening price point and altering tires and an upgraded inventory system to allow daily review and replenishment.”

That said, margins are expected to remain under pressure into the final quarter of fiscal 2023. As such, the company said it will continue “managing mix within product categories to improve profitability and taking opportunistic pricing actions” in the current quarter.

“We also expect to continue improving our operating cash flow, driven by continued working capital reductions, our balanced approach of returning capital to shareholders as well as completing value enhancing acquisitions will meaningfully increase our return on invested capital,” CFO Brian D’Ambrosia concluded.

Shares of Monro Inc. (MNRO) rose 5.49% on Wednesday.

Read the earnings call transcript.