Regis Corporation (RGS) Misses Q3 EPS by 3c

Regis Corporation (NYSE: RGS) reported Q3 EPS of ($0.06), $0.03 worse than the analyst estimate of ($0.03). Revenue for the quarter came in at $442.6 million versus the consensus estimate of $453.45 million.

Dan Hanrahan, President and Chief Executive Officer, commented, “Our third quarter performance consists of three different story lines. First, our North American Value business, representing approximately 85% of our total fleet, continues to demonstrate improvement. In this segment, we reported 100 basis points of same-store sales improvement for the quarter compared to a 30 basis point decline in the prior year quarter. Supercuts and SmartStyle, our two national brands representing more than 50% of our overall salon portfolio, posted combined same-store sales improvement of 220 basis points, compared to 70 basis points in the prior year quarter. These national brands have now achieved year-to-date combined same-store sales of 350 basis points, and reinforces how our key strategies are leading to improved execution. We also continued to grow our franchise base, posting quarter and year-to-date revenue gains of 9.1% and 8.3%, respectively. Our franchise business has enabled us to expand our Supercuts footprint and is contributing to revenue, cash flow and the Supercuts advertising fund. Our Supercuts national TV advertising program has positively impacted both our franchise and corporate Supercuts business.

“The second story line is in our mall business, comprised primarily of our North American Premium and MasterCuts businesses. We continue to face challenges in this portion of our business model and reported combined same-store sales declines of 600 basis points in the quarter. Our primary focus has been on turning the value business and our results indicate we have made good progress. We are now in the process of increasing our attention on the mall-based salons and will continue to implement strategies to address this smaller portion of the business.

“The third story line relates to our retail product business. While retail comps have improved 200 basis points year-to-date, they declined 350 basis points in the quarter. The consumer didn't respond as well as we had planned to our January and February promotion. While not the retail results we expected, we learned from it. We launched a new promotion in March and saw improved retail performance. The promotion was easier and more fun for stylists to engage guests to buy retail products and included a great incentive for service guests to buy product.”

Mr. Hanrahan concluded, “Improvements in our North American Value business are a direct result of our key strategies focused on Leadership Development, Technical Education and Asset Protection as we drive to make Regis the place where stylists can have successful and satisfying careers. We are transforming a culture comprised of 45,000 stylists, 7,000 salons, and over 1,000 field leaders and we are moving in the right direction. While the transformation and improvement will not be linear, it is essential to creating a great environment for stylists and growing guest traffic. We have work to do to drive sustainable growth in guest traffic which will enable us to realize the potential of each of our salons and result in long-term growth and shareholder value.”

For earnings history and earnings-related data on Regis Corporation (RGS) click here.

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