Regis Corp. Slips To Loss In Q2

(RTTNews) - Regis Corp. (RGS) reported that its net loss for the second quarter was $9.40 million or $0.26 per share, compared to net income of $6.53 million or $0.15 per share in the year ago quarter.

Net loss from continuing operations was $9.5 million or $0.26 loss per share compared to net income from continuing operations of $0.4 million or $0.01 income per share in the second quarter of 2019. The latest-quarter result include $20.7 million of non-cash goodwill de-recognition associated with the sale of 443 salons to franchisees, partially offset by $2.6 million of other discrete items.

Excluding items, adjusted net income was $4.6 million or $0.13 per share, compared to $8.0 million, or $0.18 per share, for the same period last year. The year-over-year decrease in adjusted net income was driven primarily by the elimination of adjusted net income that had been generated in the prior year period from the 1,447 company-owned salons that were sold and converted to the Company's asset-light franchise portfolio over the past twelve months.

Analysts polled by Thomson Reuters expected the company to report a loss of $0.03 per share for the quarter. Analysts' estimates typically exclude special items. Total revenue in the quarter of $208.8 million decreased $65.9 million, or 24.0%, year-over-year driven primarily by the conversion of a net 1,447 company-owned salons to the Company's asset-light franchise portfolio over the past 12 months. These reductions were partially offset by revenue growth of $39.4 million in the Company's franchise segment.

Analysts expected revenues of $204.85 million for the quarter.

The company continues to make meaningful progress on its previously disclosed effort to convert to a fully-franchised model. During the quarter, it sold and transferred 443 company-owned salons to its asset-light franchise portfolio.

In addition, the company has a pipeline of approximately 900 salons to be transitioned in various stages of negotiation. The pipeline represents approximately 50% of the Company-owned salon portfolio when taking into account expected closures of approximately 350 - 500 company-owned salon location.