Regis reports lower 3rd-quarter revenue

  • Article by: SUSAN FEYDER , Star Tribune
  • Updated: April 9, 2012 - 6:36 PM

Same-store sales also fell at the Edina-based hair salon chain.

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A Regis salon

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Budget-conscious consumers continue to give Regis Corp. the financial equivalent of a bad hair day.

The Edina-based hair care company said Monday that fewer and more frugal customers showed up at its salons in the third quarter, sending revenue down by 1.3 percent to $574 million.

Same-store sales fell 3.4 percent from the same period last year. It was the 15th consecutive quarterly decline in same-store sales -- a key benchmark of performance.

The declines were worse than analysts had expected. Erika Maschmeyer, an analyst at Robert W. Baird & Co., said in a research note than the disappointing results were a reminder there are no quick fixes ahead for the struggling hair salon chain.

"We believe improvement will be gradual and choppy given a challenging environment for Regis' moderate consumer and headwinds facing regional malls," she wrote.

The company noted that the decline in same-store sales narrowed in March to just 1.7 percent versus 4.3 percent for January and February.

"We will take a wait-and-see approach" Brent Rystrom, an analyst at Feltl and Co., said in a research note. He noted that this year's March results might have been helped by an earlier Easter.

In North America, Regis' service-related sales fell more severely than its sales of hair care products. The company's higher-priced Regis Salons posted weaker sales than its moderately-priced chains like SuperCuts, MasterCuts and Promenade.

The strongest performer of the quarter was the Hair Restoration segment, which posted same-store sales growth of 4.3 percent. Earlier this year Regis said it was exploring the sale of the unit along with its international operations.

The potential divestitures are part of a larger makeover for the company, which is in the midst of eliminating at least half its salon brands to cut costs and simplify its bulky business.

In a statement, Eric Bakken, interim chief operating officer, said the company is taking aggressive steps to improve performance by focusing its business around four distinct consumer segments with differentiated marketing strategies and product offerings.

"We remain confident and focused on our strategy to improve the salon experience for our customers," Bakken said.

Regis is scheduled to report its earnings later this month. In January it reported a 2 percent decline in sales and a loss of $57.4 million for its second quarter and lowered its full-year earnings-per-share forecast from a range of $1.16 to $1.32 to a range of $1.11 to $1.21.

Regis shares closed at 17.54, down about 2 percent.

Susan Feyder • 612-673-1723

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