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Regis (RGS): Some Brands Strong but Traffic Remains a Hitch
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On Dec 2, we issued an updated research report on Regis Corporation (RGS - Free Report) . Headquartered in Edina, MN, the company owns, operates and franchises hairstyling and hair-care salons worldwide.
Shares of Regis have widely underperformed the Zacks categorized Retail Miscellaneous/Diversified industry year to date. It recorded a dip of 4.2% while the industry grew 10.6% in the same period. Shares experienced the highest fall after weak fiscal third-quarter 2016 results in April. The company is slowly trying to recover from the fall.
In October, it posted mixed first-quarter fiscal 2017 results wherein the bottom line beat the Zacks Consensus Estimate, but the top line lagged the same. Notably, though revenues decreased year over year, earnings improved from the year-ago figure drastically.
Prospects
The company’s Supercuts and SmartStyle brands, representing more than 50% of its overall salon portfolio, have been performing consistently well over the past few quarters. Meanwhile, the SuperCuts and SmartStyle websites offer information on beauty, products and styling trends and continue to gain popularity. Notably, with more than 1 million visits per month to supercuts.com, web traffic is up 85% over the last two years.
Moreover, several sales building initiatives undertaken by the company like the launch of SuperCuts mobile app, digital check-in service and upgradation of its point of sale system bode well and should drive the top line and comps, going forward.
Regis also continues to make efforts to reduce costs and augment profitability through initiatives like managing inventory level and improving supply chain efficiency. The company is trying to enhance margins in the North American salons by improving productivity levels through efficient staff scheduling.
Regis’ franchise business has been contributing significantly to the company’s growth and overall profitability. In fact, franchisees have been posting positive same-store sales for the past few quarters. Also, the company has been consistently adding franchisees to its system which is reducing its capital requirement.
Concerns
Regis has been mostly witnessing declining comps for the past several quarters due to a continuous fall in guest count. Notably, sluggish traffic is affecting the top-line growth and has even led to the closing down of underperforming salons. Unless the company reinvigorates its brands to maintain its relevance in the current hair salon business, the trend is unlikely to improve.
Moreover, operating margins have been under pressure due to a combination of declining revenues as well as increased investments in technology and sales building initiatives.
Moreover, the company is losing out in terms of unfavorable forex translations as well as a challenging consumer spending environment..
Regis currently has a Zacks Rank #3 (Hold).
Stocks to Consider
Better-ranked stocks in this sector include Big 5 Sporting Goods Corp. (BGFV - Free Report) , ULTA Salon, Cosmetics & Fragrance, Inc. (ULTA - Free Report) and Dick’s Sporting Goods, Inc. (DKS - Free Report) .
ULTA Salon is a Zacks Rank #2 (Buy) company. It recorded an earnings beat in each of the four trailing quarters with an average positive surprise of 6.8%
Dick’s Sporting Goods also has a Zacks Rank #2. Additionally, it recorded positive earnings surprises in three of the trailing four quarters with an average beat of 8.8%.
The Best Place to Start Your Stock Search
Today, you are invited to download the full list of 220 Zacks Rank #1 ""Strong Buy"" stocks – absolutely free of charge. Since 1988, Zacks Rank #1 stocks have nearly tripled the market, with average gains of +26% per year. Plus, you can access the list of portfolio-killing Zacks Rank #5 ""Strong Sells"" and other private research. See these stocks free >>
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Regis (RGS): Some Brands Strong but Traffic Remains a Hitch
On Dec 2, we issued an updated research report on Regis Corporation (RGS - Free Report) . Headquartered in Edina, MN, the company owns, operates and franchises hairstyling and hair-care salons worldwide.
Shares of Regis have widely underperformed the Zacks categorized Retail Miscellaneous/Diversified industry year to date. It recorded a dip of 4.2% while the industry grew 10.6% in the same period. Shares experienced the highest fall after weak fiscal third-quarter 2016 results in April. The company is slowly trying to recover from the fall.
In October, it posted mixed first-quarter fiscal 2017 results wherein the bottom line beat the Zacks Consensus Estimate, but the top line lagged the same. Notably, though revenues decreased year over year, earnings improved from the year-ago figure drastically.
Prospects
The company’s Supercuts and SmartStyle brands, representing more than 50% of its overall salon portfolio, have been performing consistently well over the past few quarters. Meanwhile, the SuperCuts and SmartStyle websites offer information on beauty, products and styling trends and continue to gain popularity. Notably, with more than 1 million visits per month to supercuts.com, web traffic is up 85% over the last two years.
Moreover, several sales building initiatives undertaken by the company like the launch of SuperCuts mobile app, digital check-in service and upgradation of its point of sale system bode well and should drive the top line and comps, going forward.
Regis also continues to make efforts to reduce costs and augment profitability through initiatives like managing inventory level and improving supply chain efficiency. The company is trying to enhance margins in the North American salons by improving productivity levels through efficient staff scheduling.
Regis’ franchise business has been contributing significantly to the company’s growth and overall profitability. In fact, franchisees have been posting positive same-store sales for the past few quarters. Also, the company has been consistently adding franchisees to its system which is reducing its capital requirement.
Concerns
Regis has been mostly witnessing declining comps for the past several quarters due to a continuous fall in guest count. Notably, sluggish traffic is affecting the top-line growth and has even led to the closing down of underperforming salons. Unless the company reinvigorates its brands to maintain its relevance in the current hair salon business, the trend is unlikely to improve.
Moreover, operating margins have been under pressure due to a combination of declining revenues as well as increased investments in technology and sales building initiatives.
Moreover, the company is losing out in terms of unfavorable forex translations as well as a challenging consumer spending environment..
Regis currently has a Zacks Rank #3 (Hold).
Stocks to Consider
Better-ranked stocks in this sector include Big 5 Sporting Goods Corp. (BGFV - Free Report) , ULTA Salon, Cosmetics & Fragrance, Inc. (ULTA - Free Report) and Dick’s Sporting Goods, Inc. (DKS - Free Report) .
Big 5’s current quarter estimates have moved north by 76.5% to 30 cents per share over the past two months. It sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
ULTA Salon is a Zacks Rank #2 (Buy) company. It recorded an earnings beat in each of the four trailing quarters with an average positive surprise of 6.8%
Dick’s Sporting Goods also has a Zacks Rank #2. Additionally, it recorded positive earnings surprises in three of the trailing four quarters with an average beat of 8.8%.
The Best Place to Start Your Stock Search
Today, you are invited to download the full list of 220 Zacks Rank #1 ""Strong Buy"" stocks – absolutely free of charge. Since 1988, Zacks Rank #1 stocks have nearly tripled the market, with average gains of +26% per year. Plus, you can access the list of portfolio-killing Zacks Rank #5 ""Strong Sells"" and other private research. See these stocks free >>