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Regis Completes $163.5M Sale of Hair Club

The sale aligns with the struggling company’s efforts to evaluate “non-core” assets, cut costs, and refocus on its North American salon operations.

Nine months after striking a deal to sell Hair Club for Men and Women, Edina-based hair salon operator Regis Corporation said late Tuesday that it has completed the $163.5 million sale.
 
The buyer is Tokyo-based Aderans Company, Ltd., which provides wigs and hair-transplant services. Regis said in July that Aderans would pay cash.
 
Regis also said in July that selling Hair Club aligned with its efforts to evaluate “non-core” assets, cut costs, and refocus on its North American salon operations. In a related move, Regis in October completed the sale of its stake in Provalliance—the largest hair salon company in Europe—for 80 million euros, or about $105.3 million.
 
“The completion of the Hair Club transaction, along with the previously completed sale of Regis’ stake in Provalliance, represents significant progress Regis has made towards simplifying our business,” Regis President and CEO Dan Hanrahan said in a statement. “We continue to focus on improving the guest experience in our salons and enhancing shareholder value.”
 
Regis has struggled and trimmed expenses in recent years as consumers have reduced the frequency of their salon visits. Major efforts to retool its business followed a contentious proxy battle that ensued after investor Starboard Value LP, a New York-based hedge fund, said the company’s cost-cutting plans were insufficient. The investor ultimately won three board seats.
 
Hanrahan, the former CEO and president of Celebrity Cruises, took the reins in August and has since been attempting to turn the company around.
 
On April 26, Regis will release its financial results for its third quarter, which ended March 31. But for the company’s second fiscal quarter, which ended December 31, it reported a net loss of $12.3 million or $0.22 per share, marking an improvement as compared to its net loss of $57.4 million, or $0.81 per share, during the same period the prior year. Adjusted earnings, meanwhile, totaled $0.03 per share, well below the $0.13 per share that analysts polled by Thomson Reuters had expected. Revenue during the second quarter totaled $506.2 million, down 3.8 percent from the same period the prior year and slightly above the $504.9 million that analysts had expected.

For its first fiscal quarter, which ended September 30 of last year, Regis reported earnings of $28.5 million, or 45 cents a share—up dramatically from $8.3 million, or 15 cents a share, during the same period a year ago.

Regis, which is among Minnesota’s 25-largest public companies based on revenue, owns and franchises salons under brands including Supercuts, Sassoon Salon, Regis Salons, MasterCuts, SmartStyle, Cost Cutters, and Cool Cuts 4 Kids. It owned or franchised about 10,000 locations at the end of 2012.
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