Regis Corp. said its quarterly profit improved but its revenue remained under pressure, and executives signaled they may accelerate sales of its hair salons to franchisees.
The company, based in Edina, reported net income of $3.3 million, which amounted to 7 cents a share, for the July-to-September period the first quarter of its fiscal year. Adjusted for the effect of a deferred tax allowance, the company earned 9 cents a share.
A year ago, Regis lost 2 cents a share in the period.
Revenue was $431 million, down 4 percent from a year ago. And the company reported declines in comparable revenue for services and products.
The company’s stock gained 11 percent on Thursday, closing at $13.13.
Despite the gains on the bottom line, Chief Executive Dan Hanrahan said: “These operating results are not meeting our expectations.”
He added, “The strong results of our top leaders are overshadowed by underperforming salons which continue to be a drag on our consolidated financial results.”
He said the company’s move to boost its franchise business, which has grown 21 percent since 2013, was contributing “significantly” to profitability.
“Over the past years, we have sold approximately 200 underperforming salons to franchisees,” he said. The company also hired Huron Consulting to help develop the franchise business model.
The company owns or franchises about 9,500 hair salons under the Regis, Supercuts, SmartStyle, MasterCuts and other brands.