On Aug 30, Zacks Investment Research downgraded
) to a Zacks Rank #5 (Strong Sell), following the announcement of
disappointing fiscal fourth-quarter 2013 results in late
Why the Downgrade?
On Aug 27, Regis announced weak fourth-quarter results,
missing the Zacks Consensus Estimate for both earnings and
revenues. The company's adjusted earnings of 6 cents per share
missed the Zacks Consensus Estimate of 10 cents by 40% and the
comparable year-ago quarter's earnings of 36 cents by 83.3%.
Regis' earnings have been under pressure for quite some time
now due to lower top line, higher labor costs and mounting retail
expenses. The company has delivered negative earnings surprises
for the last four quarters with an average negative surprise of
In the fourth quarter, total revenue declined 5.0% year over
year to $502.3 million, missing the Zacks Consensus Estimate of
$514 million by 2.3%. Quarterly revenues were hurt by a 3.1%
decline in consolidated comps resulting from a 3.7% fall in
traffic. Notably, Regis missed the Zacks Consensus Estimate for
revenues for the fourth time in a row.
Following the dismal fourth-quarter results, the Zacks
Consensus Estimate mostly moved downwards. The Zacks Consensus
Estimate for fiscal 2014 decreased 41.7% to 21 cents over the
last 7 days.
Owing to the continuous fall in guest count, the company has
been witnessing declining comps for the past 20 quarters.
Although the company has taken several sales-building
initiatives, we believe that the sluggish comps trend will
continue to affect its performance until the customer-visit
patterns completely rebound. Apart from this, in the concurrent
quarters, the company's profit is also expected to be under
pressure due to higher labor costs
Other Stocks to Consider
Some other retail stocks with a favorable Zacks Rank that are
performing well and are worth considering include
Five Below, Inc.
Steiner Leisure Ltd.
Tractor Supply Company
). All these companies carry a Zacks Rank #2 (Buy).
FIVE BELOW INC (FIVE): Free Stock Analysis
REGIS CORP/MN (RGS): Free Stock Analysis
STEINER LEISURE (STNR): Free Stock Analysis
TRACTOR SUPPLY (TSCO): Free Stock Analysis
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