) recently gave an update on the sales and same-store sales (comps)
figures for its upcoming fourth quarter. The company reported
fourth quarter 2012 revenues of $568.0 million, down 4.0% year over
year and 1.0% sequentially.
Same-store sales (comps) for the fourth quarter fell 3.0% year over
year. The rate of decline was steeper than the year-ago drop of
1.7% but lower than the previous quarter's decrease of 3.4%,
indicating a persistent deterioration in the company's same-store
sales. Service same-store sales fell 3.7% versus a decline of 1.7%
in the prior-year quarter.
Retail same-store sales fell 0.5% against versus a decline of 1.1%
in the fourth quarter of 2011, implying that the company is slowly
improving in driving traffic. However, consolidated hair
restoration business remained a bright spot with same-store sales
growth of 4.4% in the quarter versus 1.3% in the prior-year
Geographically, North America has been a better performer than the
international market. Domestic same-store sales fell 3.3% year over
year, while international same-store sales fell even deeper by
6.6%. The international trend was assuring as it showed a huge
improvement over the last quarter's decline of 10.6%.
While the company's relatively higher-priced, mall-based Regis
Salon division was challenged, value salon concepts were relatively
better positioned owing to the price sensitivity of consumers in
the backdrop of economic uncertainty. The anemic economy is making
customers pull back their expenses on expensive and discretionary
Comps at Supercuts (located in strip centers; around $17 average
ticket) improved slightly year over year, while MasterCuts (around
$22 average ticket), SmartStyle salons (around $21 average ticket),
which are located exclusively in Wal-Mart Supercenters and the
higher-end Regis salons (about 87% located in malls; around $42
average ticket) posted decreases of 3.5%, 4.6% and 5.1%,
Regis, which owns, franchises or has stakes in more than 12,800
salons, hair restoration centers and cosmetology education
services, is taking initiatives to turn its business around. During
the quarter, this Edina-based company deployed several strategies
to augment customers' salon experience. The initiative includes
repositioning of business into four separate consumer segments and
efficient allocation of human resources. With so many initiatives
in place, management set a same-store sales improvement target for
However, all these efforts will take sometime to fully materialize.
At the current level, Regis continues to struggle with its comps
and sales. On other hand, frequent changes in top management remain
a cause of concern for the company.
Regis which competes with the likes of
Ulta Salon, Cosmetics & Fragrance Inc.
) currently retains a Zacks #3 Rank that translates into a
short-term Hold rating. We are maintaining a long-term Neutral
recommendation on the stock.
REGIS CORP/MN (RGS): Free Stock Analysis Report
ULTA SALON COSM (ULTA): Free Stock Analysis
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