Regis’ CEO-to-Be Leaves Co.; 110 Laid Off
Regis Corporation President Randy L. Pearce, who was set to take the helm as CEO in February, plans to leave the company instead.
The Edina-based hair-care company made that announcement Thursday-and separately confirmed that it laid off 110 employees at its corporate office this week. Further details about the job cuts weren't immediately available mid-day Thursday.
Regis said that Pearce intends to retire from the company on June 30, the end of its fiscal year.
Regis has formed a search committee of independent directors that's tasked with finding a new CEO to replace Paul D. Finkelstein, who plans to step down in February-and the committee has retained executive recruiting firm Korn/Ferry International to assist in the search process.
“While there is still work to do, I believe that Regis is increasingly better positioned for the future,” Pearce said in a statement. “Regis has always felt like a home to me, and I continue to believe strongly in Regis' employees, mission, and core strategy. It has been both a privilege and a pleasure to serve Regis for the past 27 years, and I look forward to new personal challenges.”
Pearce joined Regis in 1985 after spending four years with global accounting firm Coopers & Lybrand. He held several finance posts at Regis before becoming president in February 2011.
News of Pearce's planned departure comes a week after the company ousted Executive Vice President and Chief Operating Officer David Bortnem. It also comes on the heels of a contentious proxy battle that ended in October when Regis investor Starboard Value LP, a New York-based hedge fund, won three board seats. Earlier that same month, Regis announced that Pearce would become CEO in February and outlined a planned $40 million to $50 million expense reduction over the next two fiscal years-but Starboard said the plans were insufficient and fought for control on the board.
Regis' lead independent Director Joel Conner said in a Thursday statement that the company's new CEO will “focus on a compelling customer experience and deliver a substantial increase in shareholder value.”
He added: “Today's announcements reflect the company's commitment to enhanced shareholder value and strong corporate governance. The board has heard the concerns from shareholders with respect to governance and compensation practices, and we are moving quickly in response.”
Regis has struggled and trimmed expenses in recent years as consumers have reduced the frequency of their salon visits amid the recession. Its net income dropped more than 79 percent in the fiscal year that ended in June 2011, and it reported a net loss totaling $8.9 million. Revenue, meanwhile, fell about 1.4 percent to $2.32 billion during the period-an improvement from a 3 percent drop the previous year.
For second quarter that ended in December, the company's revenue was down 1.9 percent to $492.1 million-and Regis reported a net loss of $57.4 million, or $1.01 per share, a sharp contrast to $14.5 million in net income for the second quarter of the prior fiscal year; the loss was prompted by a $77 million after-tax, non-cash charge related to a goodwill writedown for the company's Hair Restoration Centers. Excluding one-time charges, Regis' second-quarter earnings were 32 cents per share, higher than the 23 cents per share expected by analysts polled by Thomson Reuters.
Regis, one of Minnesota's 25-largest public companies based on revenue, operates more than 12,800 salons, cosmetology education centers, and hair restoration centers worldwide-including franchised locations.