April 23, 2008 // Franchising.com // Regis Corporation (NYSE:RGS), the global leader in the $170 billion hair care industry, today reported third quarter net income of $19.0 million, or $0.44 per diluted share. On January 31, 2008, Regis merged its continental European franchise salon operations with the Franck Provost Salon Group. As a result of this transaction, Regis repatriated $30 million of international cash and incurred $3.0 million of tax expense associated with the repatriation. Absent the one-time income tax expense, third quarter earnings were $0.51 per diluted share which was at the midpoint of the Company's previously issued guidance.
"Our same-store service sales increase of 3.3 percent in the quarter was our highest quarterly service increase in the last eight years," commented Paul D. Finkelstein, Chairman and Chief Executive Officer. "Although our third quarter same-store sales results were positively impacted by this year's early Easter holiday season, the majority of this increase was the result of our continued focus on increasing average ticket. Specifically, we implemented price increases in over 5,600 salons during the quarter."
Mr. Finkelstein continued, "We have undertaken many initiatives to improve our product business and we are confident that over time, we will see substantial improvement. Our most significant initiative is the transformation of Trade Secret to PureBeauty. These locations will have a European boutique setting and offer an exceptional assortment of prestige products. Our first location opened at the Mall of America on March 13, and has been well received by the industry as well as the consumer."
On April 11, 2008, the Company reported that revenues for the third quarter ended March 31, 2008 increased four percent to $680 million versus $655 million in third quarter of fiscal 2007. Consolidated same-store sales increased 1.4 percent for the quarter meeting the midpoint of the Company's previously issued guidance range. The deconsolidation of the beauty schools and the European franchise salon operations reduced revenue in the quarter by approximately $28 million. Absent the impact of the school and European deconsolidation, consolidated revenues for the quarter would have increased 8.5 percent.
As of March 31, 2008, Regis Corporation owned, franchised or held ownership interests in 13,449 worldwide locations, a net increase of 814 units during the quarter.
The following points pertain to the fourth quarter ending June 30, 2008:
The following points pertain to the fiscal year ending June 30, 2008:
"Consistent with previous practice, included in our third quarter press release today is a detailed forecast for our upcoming fiscal year," commented Randy L. Pearce, Senior Executive Vice President and Chief Financial Officer. "The development of our fiscal 2009 budget did present a unique challenge in one respect. At this early date, it is difficult to estimate the financial impact the Trade Secret transformation process will have on our fiscal 2009 results given that concept testing and the resulting finalization of a business plan will not, and can not, occur until midway through the upcoming fiscal 2009 year. As a result, we developed a consolidated 'baseline' operating budget which includes Trade Secret divisional results using a 'business-as-usual' approach, thereby excluding all incremental revenues and expenses associated with the transformation to PureBeauty.
"Throughout fiscal 2009 we plan to track and report all incremental revenue and expenses related to the Trade Secret transformation. These items will then be removed from our consolidated reported results in order to measure our underlying performance on an apples-to-apples basis against the fiscal 2009 'baseline' budget. When we report our fourth quarter fiscal 2008 results in August, we will include additional guidance detailing the potential impact of the transformation on our first quarter fiscal 2009 results."
Mr. Pearce concluded with the following points, "We are pleased to present an underlying 'baseline' operating budget for fiscal 2009 that reflects an increased earnings target range of $2.03 to $2.29 per share, based on a same-store sales assumption of 50 basis points to 2.5 percent. The midpoint of this earnings range represents an increase of $0.09 from the midpoint of our underlying fiscal 2008 guidance.
"We certainly believe there is potential upside in our stated earnings range coming from future acquisitions and perhaps from further cost reduction initiatives as well as any improvement in retail product sales."
The following "baseline" forecast pertains to the fiscal year ending June 30, 2009 and, consistent with past practices, excludes revenue and earnings from future acquisitions:
Regis Corporation will host a conference call discussing third quarter results today at 10:00 a.m., Central time. Interested parties are invited to listen by logging on to www.regiscorp.com or dialing 800-219-6110. A replay of the call will be available through April 26, 2008. The replay phone number is 800-405-2236, access code 11110899#.
Regis Corporation (NYSE:RGS) is the beauty industry's global leader in beauty salons, hair restoration centers and cosmetology education. As of March 31, 2008, the Company owned, franchised or held ownership interests in over 13,400 worldwide locations. Regis' corporate and franchised locations operate under concepts such as Supercuts, Vidal Sassoon, Regis Salons, MasterCuts, SmartStyle, Cost Cutters, Trade Secret, PureBeauty, BeautyFirst and Hair Club for Men and Women. In addition, Regis maintains an ownership interest in Provalliance, which operates salons primarily in Europe, under the brands of Jean Louis David, Franck Provost and Saint Algue. Regis also maintains ownership interests in Empire Education Group, Inc. and various other salon concepts such as Cool Cuts 4 Kids, and the Beauty Takashi and Beauty Plaza concepts in Japan. System-wide, these and other concepts are located in the U.S. and in over 30 other countries in North America, South America, Europe, Africa and Asia. Regis also maintains a 49 percent ownership interest in Intelligent Nutrients, a partnership that provides a wide variety of certified organic products for health and beauty. For additional information about the company, including management's most recent financial outlook and a reconciliation of non-GAAP financial information, please visit the Investor Information section of the corporate website at www.regiscorp.com. To join Regis Corporation's email alert list, click on this link: http://www.b2i.us/irpass.asp?BzID=913&to=ea&Nav=1&S=0&L=1
This press release contains "forward-looking statements" within the meaning of the federal securities laws, including statements concerning anticipated future events and expectations that are not historical facts. These forward-looking statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. The forward–looking statements in this document reflect management's best judgment at the time they are made, but all such statements are subject to numerous risks and uncertainties, which could cause actual results to differ materially from those expressed in or implied by the statements herein. Such forward-looking statements are often identified herein by use of words including, but not limited to, "may,""believe,""project,""forecast,""expect,""estimate,""anticipate" and "plan." In addition, the following factors could affect the Company's actual results and cause such results to differ materially from those expressed in forward-looking statements. These factors include competition within the personal hair care industry, which remains strong, both domestically and internationally; price sensitivity; changes in economic conditions; changes in consumer tastes and fashion trends; labor and benefit costs; legal claims; risk inherent to international development (including currency fluctuations); the continued ability of the Company and its franchisees to obtain suitable locations for new salon development; governmental initiatives such as minimum wage rates, taxes and possible franchise legislation; the ability of the Company to successfully identify, acquire and integrate salons that support its growth objectives; the ability of the Company to maintain satisfactory relationships with suppliers; or other factors not listed above.The ability of the Company to meet its expected revenue growth is dependent on salon acquisitions, new salon construction and same-store sales increases, all of which are affected by many of the aforementioned risks. Additional information concerning potential factors that could affect future financial results is set forth in the Company's Annual Report on Form 10-K for the year ended June 30, 2007. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. However, your attention is directed to any further disclosures made in our subsequent annual and periodic reports filed or furnished with the SEC on Forms 10-K, 10-Q and 8-K and Proxy Statements on Schedule 14A.