Regis Corporation Reports Decline in Revenue and Net Income for Fiscal Q3 2024

Regis Corporation (NasdaqGM:RGS) reported a challenging fiscal performance for the three months ended September 30, 2024, with total revenue declining to $46.1 million from $53.4 million in the same period of 2023. This decrease was primarily driven by a reduction in franchise salon count and negative same-store sales, which fell by 1.1% compared to a 1.8% increase in the prior year. Franchise revenue specifically dropped to $45.3 million from $51.4 million, reflecting a decrease of $6.1 million.

The company's operating income also suffered, falling to $2.1 million (4.6% of total revenue) from $7.4 million (13.9% of total revenue) year-over-year. Regis reported a net loss of $0.9 million for the quarter, contrasting sharply with a net income of $1.2 million in the same period last year. The net loss per share was $(0.36), compared to earnings of $0.51 per share in 2023.

Total current assets decreased to $35.4 million from $42.1 million as of June 30, 2024, while total assets also fell from $530.5 million to $508.9 million. Total liabilities decreased to $452.5 million from $473.7 million, and total shareholders' equity slightly declined to $56.4 million from $56.8 million. The accumulated deficit increased to $(22.4 million) from $(21.6 million).

Strategically, Regis has been adjusting its operations, including a significant reduction in company-owned salons, which decreased from 66 to just 9. This shift is part of a broader strategy to focus on franchising, with total franchise salons also down from 4,391 to 4,350. The company incurred severance expenses of $2.3 million during the quarter, contributing to a 30.8% increase in general and administrative expenses.

In terms of cash flow, Regis reported cash used in operating activities of $1.3 million, an improvement from $2.8 million in the same period last year. Cash provided by investing activities was $0.9 million, primarily from proceeds related to the sale of its Opensalon® Pro software. However, cash used in financing activities totaled $6.5 million, reflecting long-term debt repayments.

Regis continues to navigate a challenging market environment, with ongoing litigation risks and a focus on improving operational efficiency. The company has also entered into a new credit agreement, which includes a $105 million term loan and a $25 million revolving credit facility, maturing in June 2029. As of September 30, 2024, Regis had cash and cash equivalents of $6.3 million, down from $10.1 million at the end of June 2024.