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 second quarter ended December 31, 2012 versus the prior year as noted below. References made to discrete items were formerly referred to as non-operational items in previous earnings releases, and references made to financial measures, as adjusted, were formerly referred to as operational measures in previous earnings releases.
- Sales of $506.2 million, a decrease of 3.8 %. Same-store sales declined 1.9%.
- GAAP net loss of $12.3 million. GAAP net loss including discontinued operations per diluted share (Diluted EPS) of $0.22.
- Diluted EPS, as adjusted, of $0.03 compared to $0.27.
- Current year earnings were reduced by approximately $0.05 per share, representing increased labor costs, primarily associated with increased stylist hours, impacts of Hurricane Sandy and reduced equity in earnings of Empire Education Group, partly offset by reductions in general & administrative expenses.
- Prior year earnings were increased by $0.10 per share, representing equity in earnings of Provalliance (sold in the current year first quarter) and tax benefits primarily from the realization of employment tax credits.
- EBITDA, as adjusted, of $31.1 million compared to $43.7 million.
- Current year was reduced by approximately $8.9 million due to increased labor costs, primarily associated with increased stylist hours and impacts of Hurricane Sandy.
- Current year was improved by $6.1 million of reductions in general and administrative expenses, as adjusted, representing an 80 basis point decline as a percentage of revenues.
- The current year quarter includes net discrete after-tax expense of $14.0 million, primarily related to impairment of our investment in Empire Education Group, partly offset by earnings from discontinued operations. The prior year quarter includes $73.8 million of net discrete after-tax expense.
- All periods presented reflect the reclassification of our Hair Restoration segment to discontinued operations. During the current quarter, the Hair Restoration segment generated earnings of $0.07 per diluted share.
“Second quarter results reflect conscious decisions we’ve made to invest in our business to drive traffic,” said Dan Hanrahan, President and Chief Executive Officer. “We made the decision to increase salon hours, primarily in our SmartStyle salons located in Walmart and our Supercuts salons. We knew this decision would impact gross margins, but we believed increasing hours would help stem continued declines in guest traffic. By adding hours, we are beginning to see improvements in guest traffic, especially in our SmartStyle and Supercuts businesses. Service traffic in SmartStyle was up over 4% for the quarter compared to the same period last year, and for the first time in thirteen consecutive quarters, SmartStyle posted positive same-store service sales. Overall, same-store sales trends improved 120 basis points compared to the first quarter of this fiscal year.”
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