As Regis Posts Loss, CEO Says Results Are “Not Acceptable”
Regis Corporation, the Edina-based operator of hair salon chains, on Wednesday reported a quarterly loss coupled with a 6.6 percent decline in revenue—results that CEO Dan Hanrahan called “not acceptable.”
The company has been attempting a turnaround, as it has struggled and cut costs in recent years while consumers cut back on salon visits. Hanrahan previously said that “disruptive” changes are necessary for the turnaround, and he echoed that sentiment in Wednesday's announcement, while also pointing out that the company has revamped its senior leadership team.
“While our third-quarter results are not acceptable, we began moving into the transition and execution stage of our turnaround,” Hanrahan said in a statement. “Albeit early, the first signs of transitioning from disruption, caused by these necessary changes, to execution, are showing. Where we have an effective leader using the processes and metrics to drive results, we are beginning to win.”
Regis said its revenues totaled $471.6 million for the quarter that ended March 31, down from $504.9 million during the same period a year ago. Same-store service—meaning revenue from services provided at salons that were open at least a year—dropped roughly 5 percent, while same-store product sales slid about 9 percent.
Meanwhile, the company reported a net loss of $9.5 million, or $0.17 per share, compared to a profit of $2.4 million, or $0.04 per share, during last year’s fiscal third quarter. Its adjusted loss per share was $0.15; analysts polled by Thomson Reuters expected the company to report a loss of $0.06 per share.
Shares of Regis’ stock were trading down more than 3 percent at $12.76 Wednesday morning.
Regis’ turnaround plan has largely focused on improving point-of sale systems at its salons and investing in its field employee base, from regional managers to salon workers. The company said its recent additions of a chief human resources officer and chief operating officer are helping advance that effort. The company is also seeking a new chief merchandising officer, and it hopes that leader will help address declining retail sales.
Late last year, Regis also outlined a new strategy for allocating capital and said it would cease paying quarterly dividends.
Hanrahan said Wednesday that the company has “made progress over the last nine months” and he is “motivated” by the “cultural transformation” that is ongoing. “While realizing the benefits across 7,000 salons and 50,000 stylists will take time, I remain encouraged by the performance of our best operators,” he said.
Regis, which is one of Minnesota's 25 largest public companies, operates an array of brands, including Supercuts, SmartStyle, MasterCuts, Regis Salons, Sassoon Salon, Cost Cutters, and First Choice Haircutters. As of March 31, it owned or franchised 9,679 locations worldwide.