Regis Says “Disruptive” Changes Necessary For Turnaround
Regis Corporation on Tuesday reported a decline in quarterly revenue and said that it has invested heavily in its turnaround strategy.
The Edina-based hair salon operator reported $468.6 million in revenue for the quarter that ended September 30, down more than 7 percent from the same period a year ago but better than the $461.6 million that analysts polled by Thomson Reuters were expecting.
Same-store sales—or revenue from locations open at least a year—slid 5.4 percent during the period. Revenue from services provided at those stores declined 3.1 percent, while product sales plunged nearly 15 percent.
Regis reported a net loss of $136,000 for the quarter, compared to a profit of $38.4 million during last year’s first quarter.
Adjusted earnings, which exclude certain costs, totaled $0.01 per share, down from $0.08 per share a year ago. They beat the $0.05 per share loss that analysts expected, though.
Regis has struggled and trimmed expenses in recent years as consumers have reduced the frequency of their salon visits—and the company said it has recently invested heavily in its turnaround plan.
“Last quarter, we made significant investments behind three foundational initiatives that were necessary to allow Regis to move along a strategic continuum towards becoming a best-in-class operator,” President and CEO Dan Hanrahan said in a statement.
Those investments included rolling out a new point-of-sale system throughout North America and reorganizing the company’s “field leadership” by installing 11 “highly competent” regional vice presidents “to enable more localized management and decision-making,” the company said. Regis also “standardized” its retail “plan-o-grams,” which are essentially virtual merchandising tools that visually depict a store’s layout and products.
“Although the transformational changes we implemented have been disruptive, these changes are necessary to turn Regis around,” Hanrahan said. “We have taken significant actions to stabilize the business. While our sales performance in the first quarter is not where I would like it to be, I am pleased with our efforts to control expenses. We are seeing pockets of revenue improvement, which provide us with confidence that the operational changes we put in place will position Regis to improve over time. The key to our success is continuing to improve our ability to execute at the salon level through the development of our field leaders and salon managers, so we consistently deliver a strong guest experience.”
Shares of Regis’ stock were trading up about 1.5 percent at $14.41 late Tuesday morning.
Regis is among Minnesota’s 25 largest public companies based on revenue. As of September 30, it owned, franchised, or held ownership interests in 9,752 worldwide locations under brands like Supercuts, SmartStyle, MasterCuts, Regis Salons, Sassoon Salon, Cost Cutters, and Cool Cuts 4 Kids. Earlier this year, it completed its $163.5 million sale of the Hair Club for Men and Women brand.
Last week, Regis announced that it appointed Jim B. Lain, an executive from The Gap, Inc., as its executive vice president and chief operating officer, effective November 11.
As of the end of September, Regis had about 50,000 employees worldwide.