Regis Corp.'s (RGS) third quarter 2011 earnings missed the Zacks Consensus Estimate due to sluggish same-store sales and lower margin. The economic downturn has severely impacted the company's earnings in the last few quarters, and Regis now expects same-store sales to be in the range of -1% to +1% for 2012, reflecting persistent economic challenges.
Slower traffic due to economic concerns remains a drag on same-store sales. Moreover, Regis outlook remains below consensus, as consumer-visit pattern is not rebounding quickly. Consumers across the globe are cutting back on expenditures, which is resulting in a slowdown in spending and longer recesses between salon visits.
The company also faces lingering risk from fashion changes. Hence, we maintain our Underperform rating on the stock.
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