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Actionable news in RGS: REGIS CORPORATION,

Regis: Mark Fosland – Svp, Finance And Investor

The following excerpt is from the company's SEC filing.

Relations, 952-806-1707

For Immediate Release




October 29, 2015

-- Regis Corporation (NYSE: RGS), a leader in the haircare industry, whose primary business is owning, operating and franchising hair salons, today reported results for its fiscal first quarter ended

September 30, 2015

versus the prior year as noted below.

As a result of the Company's valuation allowance against most of its deferred tax assets, associated reported and, as adjusted, after-tax results of operations are not comparable to prior periods.

Sales of

$450.1 million

, a decline of

$14.4 million

. Same-store sales


Same-store service sales

and same-store product sales

GAAP net loss of

$(0.8) million


per diluted share.

Includes $(0.03) per diluted share impact due to the deferred tax valuation allowance on income tax expense.

EBITDA, as adjusted, of

$22.9 million

compared to

$21.9 million

in the prior year quarter.

Increase of $2.2 million from same-store sales improvement and franchise growth.

Decline of $(1.2) million mainly from minimum wage increases, stylist productivity, impact of an additional year of earned performance equity grants, planned strategic investments and foreign exchange, partly offset by costs savings, reduced self-insurance, lapping certain costs in the prior year quarter, and lower marketing expenditures due to timing.

Diluted EPS, as adjusted, was


Excluding the impact of the deferred tax valuation allowance, Diluted EPS, as adjusted, increased $0.05 per share compared to the prior year quarter.

Increase of $0.03 per share from same-store sales improvement and franchise growth.

Increase of $0.01 per share due to lower depreciation, cost savings, reduced self-insurance, lower interest expense, lapping certain costs in the prior year quarter, and lower marketing expenditures due to timing, partly offset by minimum wage increases, stylist productivity, impact of an additional year of earned performance equity grants, planned strategic investments, foreign exchange and non-cash losses from our equity investment in Empire Education Group.

Increase of $0.01 per share due to reduced shares outstanding.

The current quarter GAAP net loss includes discrete income of

$0.2 million

. The prior year quarter GAAP net loss includes net discrete expense of

$0.6 million

. See non-GAAP reconciliations.

Dan Hanrahan, President and Chief Executive Officer, commented, “The focus on Leadership Development, Technical Education and Asset Protection are continuing to improve our execution capability. In the first quarter, same-store sales increased 70 basis points, comprised of increases in same-store service and retail sales of 30 and 240 basis points. We also executed against our capital allocation policy by repurchasing $44 and $30 million of our shares during the first and second quarter to-date at very reasonable prices.

“A greater percentage of our field leaders drove positive same-store sales during the quarter compared to all of fiscal 2015. Our strong leaders are driving sustainable improvement by using the tools, processes and metrics we provide to drive growth quarter after quarter. These leaders are driving improved execution by developing their teams and hiring and retaining top stylists and salon leaders. That said, our opportunity remains our underperforming leaders who have yet to show consistent revenue progress. In these situations, we continue to provide additional training and development, or upgrade talent as necessary. We are significantly changing the way Regis manages the salon business, and I am very proud of our team’s growing ability to execute on our strategies. While our quarterly progress may not always be linear, I am confident we are on a path to deliver consistent long-term growth and profitability.”

The Company provided an update on its three key priorities to improve execution and performance in fiscal 2016. These areas follow the theme of people, process and metrics enabled by real-time information to make good business decisions and drive improved execution.

. Our focus on developing strong leaders who train, coach, mentor and lead their teams to success remains a top priority. Our formal training programs are now a regular part of the calendar for our field operations team and something they look forward to for the learning and inspiration they can bring back to their salons. We also extended our reach beyond our Regional Vice Presidents and Regional Directors to our District Leaders and now to our Salon Managers.

We deployed our 12-week Salon Manager training program during the first quarter. This is a comprehensive program that helps Salon Managers become more confident in their roles as teacher, leader and coach to stylists and focuses them on stylist retention, staffing and profitable revenue generation. Rollout of this training occurred about 5 weeks ago, and early participation has exceeded our expectations. Salon Manager and District Leader feedback has been quite positive. This curriculum is also being used as our onboarding program for new Salon Managers, creating a more standardized platform to empower our new leaders.

. Making Regis a place where stylists can expect continued technical, product and experiential training reinforces our commitment to stylists’ ongoing development. We are becoming more localized in the way we deliver and execute technical and experiential training, and have been following specific onboarding plans to build out our technical education team across our salon portfolio and align

Artistic Directors with our Regional Directors. Our technical education program will ensure all salons receive in-salon technical training and provide regional cluster classes for stylists to leverage based on specific needs.

. Creating an environment where all stylists are working together, positively contributing to the health of our salons and salon teams, remains a key priority for our Asset Protection team. Enhanced exception reporting tools and case management systems provide key salon metrics that enable us to prioritize our asset protection efforts against our most compelling revenue growth opportunities. Through our asset protection awareness program and salon visits, our Asset Protection team is encouraging field leaders to make the right choices to optimize their individual success and revenues of Regis. During the first quarter, Asset Protection conducted over 800 awareness training sessions and salon visits. Not only did we continue to see sales trends improve due to these visits, but our Asset Protection team also assisted our field leaders in retaining high performing stylists and coaching stylists to grow their businesses to earn commissions.

Mr. Hanrahan concluded, “We are following the right strategies to make Regis the place where stylists can have successful and satisfying careers, and doing so will drive improved stylist retention, salon staffing, salon-level execution, and in turn, great guest experiences that lead to consistent, profitable growth. Our field leadership talent and execution capabilities are improving. We are taking necessary and critical steps to transform our culture into one that is focused on improving execution to realize the potential of each of our salons. We are hard at work and focused on driving daily executional improvements. As the team continues to execute our strategies, I am confident in our ability to make Regis the place for stylists to have successful and satisfying careers, which in turn will deliver long-term growth and shareholder value.”

Comparable Profitability Measures


Three Months Ended

September 30,

Fiscal Years Ended

June 30,



(Dollars in millions)




Revenue decline %

Same-Store Sales %

Same-Store Average Ticket % Change

Same-Store Guest Count % Change

Cost of Service and Product %, U.S. GAAP reported and as adjusted (2)

Cost of Service % (2)

Cost of Product % (2)

Cost of Product %, as adjusted (2)

Site operating expense as % of total revenues, U.S. GAAP reported

Site operating expense as % of total revenues, as adjusted

General and administrative as % of total revenues, U.S. GAAP reported

General and administrative as % of total revenues, as adjusted

Operating income (loss) as % of total revenues, U.S. GAAP reported

Operating income as % of total revenues, as adjusted


Amounts for fiscal years 2015 and 2014 have been revised.

Excludes depreciation and amortization.

First Quarter Results:


Revenues in the quarter of


, compared to the prior year quarter. Same-store sales increased

Service revenue was

$350.2 million

$14.6 million

reduction, or

, compared to the prior year quarter. During the period, same-store service sales increased

. An increase in average ticket price of

, due to a change in service mix and pricing, was offset by a decline in guest traffic of

. Offsetting the same-

store sales increase was a

basis point...