New Regis Corp. CEO Hugh Sawyer acknowledged he has a big job ahead turning around the hair salon company.
After the Edina-based company announced Thursday another quarterly loss and decline in revenue, its shares were trading at their lowest point since 2008, according to Reuters. They closed down nearly 14 percent, or $1.51, at $9.34.
"Given the inherent strength of our core assets, our financial results have been disappointing," Sawyer said in a statement. "I look forward to working with the Regis team to accelerate the growth of our franchise business while addressing performance improvement opportunities in our company-owned salons."
Sawyer became CEO of Regis in April after the company fired former CEO Dan Hanrahan and after the third quarter had ended.
Regis had hired Sawyer's former employer, Chicago-based Huron Consulting Group, months earlier to help the company shift to a business plan where franchise ownership of salons would increase.
The company's sales for the third quarter ended March 31 were $412.6 million, down 6.8 percent from the same quarter in 2016. Its net loss increased to $18.2 million, or 40 cents per share. The third-quarter results included a 22 cents per-share charge due to the deferred tax valuation allowance on income tax expense.
The company's adjusted loss for the quarter was 18 cents per share, three times worse than 6 cents per share loss in third quarter of fiscal 2016.
The company hasn't recorded a quarter-over-quarter increase in total revenue since 2011.
Same-store sales were down 2.9 percent, partly the company said because Easter fell in April this year and March last year.
Sawyer said his first focus will be on the performance of company-owned salons.
"We are in the process of finalizing and implementing an operationally focused 120-day turnaround plan designed to improve the results of our company-owned salons," he said. "Our near-term objective is to stabilize performance and establish a platform for longer-term revenue and earnings growth in these company salons."
Sawyer wasn't ready to release details of the new short-term plan but said its "core components" would include a better customer experience and better management of labor as well as ceasing "programming" that doesn't create value.
A longer-term goal of the company is to accelerate the growth of the company's franchise business, he said.
Sawyer has promoted Eric Bakken, executive vice president and chief administrative officer, to the role of president of Regis' franchise operations to aide in that development.
Besides its namesake Regis salons, the company also operates brands such as Supercuts, SmartStyle and MasterCuts. During the third quarter, Regis sold 200 of its company-owned SmartStyle salons to franchisees.
The company said same-store sales for its "mall concepts," which include Premium and MasterCuts, declined 6.1 percent.
Same-store sales for its value concepts decreased 1.7 percent.
Patrick Kennedy • 612-673-7926
