NEW YORK (TheStreet) -- Regis (RGS) was falling 9.84% to $12.10 on Monday after the company announced worse-than-expected second quarter earnings.
The world's largest hair salon chain reported a loss of four cents per share excluding non-recurring items, which fell below analysts' estimates for the quarter. Regis' revenue also dropped 7.5% year-over-year to $468.4 million. The company also announced that its same-store sales fell 9.2%, while same-store service was down 5.5%.
President and CEO Dan Hanrahan said the following in the company's official statement:
"While I would normally not address technical accounting matters, it is important for me to comment on the $112.1 million of non-cash charges we reported during the quarter to impair goodwill and establish a valuation allowance against our deferred tax assets. These non-cash charges are highly technical in nature and do not have any economic impact on our business model. Our business model is sound, our balance sheet is strong and our business continues to generate positive cash flow. In fact, our business generated $21.6 million in EBITDA, as adjusted, for the quarter. I am confident in our ability to restore Regis to sustainable growth and improved profitability."
TheStreet Ratings team rates Regis as a "sell" with a ratings score of D+. TheStreet Ratings Team has this to say about their recommendation:
"We rate REGIS CORP/MN (RGS) a SELL. This is driven by a number of negative factors, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its unimpressive growth in net income, disappointing return on equity, poor profit margins and generally disappointing historical performance in the stock itself."