Regis Corporation (NYSE:RGS), the global leader in the $160 billion haircare industry, today reported first quarter net income of $0.45 per share. These results include a net non-operational after-tax benefit of $24.2 million, primarily related to the release of cumulative foreign currency translation rate gains primarily related to the sale of our ownership interest in Provalliance. Excluding non-operational items, first quarter operational earnings decreased to $0.08 per diluted share from $0.22 in the year-earlier quarter. All fiscal 2012 results have been restated to exclude amounts related to our hair restoration segment which is now presented in discontinued operations. During the quarter the hair restoration segment generated earnings of $0.07 per share. Sales totaled $505.4 million versus $531.3 million in the 2012 first quarter.
Same-store sales declined 3.1 percent and service margins decreased 230 basis points in the quarter. These two items were the primary drivers of the year-over-year earnings decline.
“First quarter results are indicative of the necessary re-engineering that needs to take place and this change is just beginning,” said Dan Hanrahan, President and Chief Executive Officer. “Service margins declined due to an increase in salon labor costs. In the past, Regis has consistently reduced stylist hours to offset declining customer counts. Today, our entire organization is focused on staffing and optimizing our salon schedules. Sales volumes cannot improve if we continue to reduce stylist hours in our salons.”
Mr. Hanrahan concluded, “We are committed to improving the salon experience for our guests, hiring and retaining the best stylists, continuing our efforts to simplify our operating model and effectively leveraging our scale. There is a significant opportunity to improve our financial performance.”FISCAL 2013 FIRST QUARTER FINANCIAL HIGHLIGHTS Consolidated Highlights
- Sales of $505.4 million, down 4.9% from $531.3 million in the first quarter of fiscal 2012.
- Same-store sales declined 3.1%.
- Same-store transaction counts for our salon businesses declined 2.3% in the first quarter of fiscal 2013.
- Gross margin decreased 230 basis points to 42.4% of sales from 44.7% in the first quarter of fiscal 2012.
- Operational operating margins declined 210 basis points to 1.8% of sales from 3.9% in the first quarter of fiscal 2012.
- Operational net income of $4.3 million decreased 66.4%, from $12.9 million in the first quarter of fiscal 2012.
- Operational diluted earnings per share of $0.08 decreased 65.3%, from $0.22 in the first quarter of fiscal 2012.
- Operational EBITDA of $30.4 million decreased 30.7%, from $43.9 million in the first quarter of fiscal 2012.
- Net store base decreased by 2,602 units in the first quarter for a total store count of 10,045 at September 30, 2012. The decrease was primarily due to the sale of our ownership interest in Provalliance which closed during the quarter.
- The reported income tax rate was 11.0%, which includes the impact of the net non-operational benefit. The operational income tax rate was 40.8%.
- Total cash at September 30, 2012 grew to $222.5 million, an increase of $110.5 million since June 30, 2012.
- Total debt at September 30, 2012 decreased to $280.1 million, a decline of $7.6 million since June 30, 2012.
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