Regis reports small profit; spending on salon revamp continues

Regis Corp. on Tuesday reported a small profit of $675,000 for the three months that ended in June, the last quarter of its fiscal year, as the manager of hair salons grappled with a decline in comparable sales and costs associated with updating its outlets.

The profit represented a turnaround from a loss of $63 million in the same period a year ago. And it capped a fiscal year in which Regis managed a profit of $29 million, a reversal from the $114 million loss of the previous fiscal year.

Revenue in the latest quarter was $502.3 million, down from $528.8 million in the year-ago period. Same-store sales, or those open at least a year, were down 3.1 percent from the year-earlier period.

In a statement, Regis chief executive Dan Hanrahan said the company undertook three "transformational" initiatives at once during the April-to-June period to produce better results on a sustained basis, including putting in a new point-of-sale system, reorganizing field management and standardizing the products sold through its 6,700 salons.

"While there has been a disruption to our current business performance, I am proud of the progress our entire organization has made," he said.

The new point-of-sale system, he said, will give Regis better information about customer retention and salon performance. The organizational restructuring created reduced the "span of control" of mid-level and regional managers, aiming to reduce travel costs and time, and allow them to make decisions based more on local conditions. Meanwhile, the inventory makeover will create more uniformity in the products, such as shampoos and coloring, that Regis' various salon chains offer.

Hanrahan noted that same-store sales remained lower in July and through August, though they haven't dropped as far as they did in the June quarter.

"I am not satisfied with our performance during the fourth and first quarters of fiscal 2013 and 2014," he said. "We must drive better execution, get business back on course and continue to execute on changes."

Evan Ramstad • 612-673-4241