Regis Corp. is in the midst of a business transformation that is restyling the company into a leaner more profitable company less dependent on company-owned salons.
After reporting better-than-expected fourth quarter results — and a profit for the fiscal year after losing money in fiscal 2017 — its stock on Tuesday jumped 14 percent to $20.59.
"Although we have more work to do, we are pleased to report signs of progress in our financial performance and ongoing transformation efforts," said the company's president and CEO, Hugh Sawyer, in its earnings release.
During the quarter ended June 30, Regis cut 701 salons from its network and converted another 448 company-owned salons into franchise locations. As a result, the Edina-based operator of company-owned and franchised hair salons reported revenue was down 8.1 percent to $294,885. Earnings were $4.8 million, or 10 cents per share, up from $1.3 million, or 3 cents per share, in the same quarter a year ago.
Analysts expected the company to earn $1.6 million, or 3 cents per share.
Stephanie Wissink, an equity analyst for Jefferies, wrote recently of the changes at Regis. "We still see inherent value in the operating model and would expect ongoing tuning of the structure to optimize the profit profile."
The company reported positive same-store sales results of 0.7 percent despite the fact the Easter holiday fell in the fourth quarter a year ago but in their third quarter this year. It was also marked the fourth time in last five quarters Regis has shown same-store sales growth.
The company also announced further progress on its multiyear plan to make over the company and improve the performance of company-owned stores. During the fourth quarter, the company repurchased $15.2 million worth of company shares, converted 144 company-owned salons to franchised sites and said it would consider franchising the remaining Supercuts salons that are company-owned.
