Regis Corporation (RGS) reported a year-over-year decline of 1.7% in same-store sales.
However, the rate of decline in comps improved from the year-ago quarterly drop of 2.7% and the third quarter plunge of 2.3%, attributable to higher customer footfalls. The several initiatives taken by Regis to drive traffic seems to have paid off as customer visits improved 150 basis points (bps) over the last nine months, but still plunged 2.5%.
Moreover, Regis, the largest hair salon chain in the world, posted revenues of $592 million for the fourth quarter, up 0.3% year over year.
Domestic same-store sales fell 1.6% year over year while International same-store sales decreased 5.5%. However, hair restoration same-store sales rose 1.3% in the quarter.
Results remained weak in the company’s relatively higher-priced, mall-based Regis Salon division, but value salon concepts experienced stronger sales due to a shift in consumer behavior influenced by the economic uncertainty.
Supercuts (located in strip centers; around $17 average ticket) posted a 0.2% rise in comparable store sales while higher-end Regis salons (87% located in malls; around $41 average ticket) posted a decline of 1.8%. SmartStyle salons, located exclusively in Wal-Mart Stores (WMT), and MasterCuts (around $21 average ticket) also reported declines of 2.6% and 1.4% in comps, respectively,.
Outlook
For fiscal 2012, Regis intends to focus on top-line growth and expects same-store sales to improve based on a host of initiatives, such as installation of the POS system, expansion of the Pro-Cuts concept, remodeling of stores and marketing spent to reinvigorate the brand and drive traffic.
The company is slated to release its fourth quarter earnings on August 25, 2011. The Zacks Consensus Estimate for fourth quarter earnings is pegged at 30 cents, representing an annualized negative growth of 11.44%.
Regis currently retains a Zacks #4 Rank, which translates into a short-term Sell rating. We are also maintaining our long-term Neutral recommendation on the stock.
However, one of Regis’ close competitors, Ulta Salon, Cosmetics & Fragrance Inc. (ULTA), recently reported that first quarter revenue increased 20.6% year over year to $386.0 million, on the back of higher comps, which escalated 11.1% from 10.8% reported in the prior-year quarter. Ulta currently retains a Zacks #1 Rank, which translates into a short-term Strong Buy rating.
REGIS CORP/MN (RGS): Free Stock Analysis Report
ULTA SALON COSM (ULTA): Free Stock Analysis Report
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