Regis’ Stock Slumps As CEO Cites Ongoing Challenges
Regis Corporation, the Edina-based operator of hair salon chains, on Tuesday reported a $17 million quarterly loss coupled with declining sales, and shares of the company’s stock dipped following the announcement.
Regis has been attempting to chart a turnaround, and its restructuring plan has involved investments in technology and its employees. In late April, President and CEO Dan Hanrahan cited some progress but described the company’s third-quarter results as “not acceptable.”
On Tuesday, the company reported fourth-quarter and full-year results. Hanrahan said that there remains “a clear need for transformational change to lay the foundation for the turnaround,” but the company is “seeing the first signs of transitioning from disruption to execution.”
For the fourth quarter, which ended June 30, Regis reported a 3.6 percent drop in revenue, to $483.9 million. Same-store sales—or revenue from locations that were open at least a year—slid 1.8 percent.
Regis reported a fourth-quarter net loss of $17 million, or $0.30 per share. The company largely attributed that loss to a “goodwill impairment charge” of $12.6 million that was tied to its investment in Empire Education Group, a chain of salon and beauty schools. On an adjusted basis, the company reported a per-share loss of $0.09, compared to income of $0.06 per share in the year-ago period.
Regis’ turnaround plan has focused in part on improving point-of sale systems at its salons and investing in its field employee base, from regional managers to salon workers. Hanrahan said Tuesday that, during the fourth quarter, Regis’ “best operators continued to make progress.”
“Where we have effective leaders using processes and metrics to drive results, we are beginning to win,” Hanrahan said. “While these early signs of transformation are encouraging, significant work is ahead of us before we achieve similar results across 7,000 salons.”
For the full fiscal year, Regis’ revenue fell 6.3 percent to roughly $1.9 billion. Its net loss was $135.7 million, compared to income of $29.2 million the prior fiscal year. The company’s adjusted loss per share for the fiscal year was $0.27, compared to adjusted income of $0.18 per share in the previous year.
Midday Tuesday, shares of Regis’ stock were trading down about 5.7 percent at $13.91.
As of June 30, Regis owned, franchised, or held ownership interests in 9,674 worldwide locations operating under concepts that include Supercuts, MasterCuts, Regis Salons, Sassoon Salon, Cost Cutters, and more.