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Regis (RGS) Beats Q4 Earnings, Misses Revenues, Stock Up
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Regis Corp. (RGS - Free Report) posted mixed fourth-quarter fiscal 2016 results wherein the bottom line beat the Zacks Consensus Estimate and the top line lagged the same.
Notably, Regis’ shares were up nearly 2% in yesterday’s trading session on solid bottom-line performance.
Earnings and Revenue Discussion
Adjusted earnings of 12 cents per share beat the Zacks Consensus Estimate of 1 cent and increased substantially from the year-ago figure of 1 cent as well.
The owner, operator and franchisor of hairstyling and hair care salons posted revenues of $447.7 million for the quarter, down 3.3% year over year, owing to lower Service and Product revenues, partially offset by an increase in Royalties and fees revenues. Reported revenues missed the Zacks Consensus Estimate of $457 million by 2%.
Performance in Detail
Consolidated comps in the quarter were down 1.4%. In comparison, comps were down 0.4% in the prior quarter and had declined 0.8% in the year-ago quarter.
Management believes that the shift of Easter from April in last year to March this year impacted same-store sales. Moreover, closing of unprofitable salons and foreign currency hurt revenues. However, this was somewhat offset by one extra calendar day in the quarter and growth in royalties and fees.
Service revenues dipped 3.7% year over year to $348.9 million mainly due to closing of loss-making salons and foreign currency headwinds. Same-store sales decreased 1.6% owing to a 5.1% decline in guest traffic, partially offset by a 3.5% increase in average ticket price.
Product revenues were down 2.2% year over year to $86.7 million. Same-store sales went down 0.8% due to a 0.9% decrease in guest transactions, partly offset by a 0.1% increase in average ticket price.
Royalties and fees revenues were $12.1 million, up 1.4% year over year. Franchisees posted positive same-store sales and the company added 172 net franchised locations in the last 12 months.
Cost of service, as a percentage of service revenues, increased 60 basis points (bps) to 62.1% due to higher health insurance costs and state minimum wage increases, partly offset by lower salon incentives and the timing of Easter Sunday pay.
Cost of product, as a percentage of product revenues, increased 250 bps to 49.5% mainly due to lapping one-time inventory improvements.
General and administrative expenses of $43.5 million decreased 13.2% on a year-over-year basis. The decrease was mainly due to lower incentive costs, certain costs lapping in the prior-year quarter, timing of expenses during the year, cost savings and foreign currency, somewhat offset by planned strategic investments.
The company reported earnings of 6 cents in fiscal 2016, which compared favorably with the year-ago loss of 39 cents. However, total revenue of $1.79 billion declined 2.5% year over year.
Zacks Rank & Stocks to Consider
Regis currently has a Zacks Rank #3 (Hold). Better-ranked stocks in the sector are Big 5 Sporting Goods Corp. (BGFV - Free Report) , Five Below, Inc. (FIVE - Free Report) and ULTA Salon, Cosmetics & Fragrance, Inc. (ULTA - Free Report) . All the three stocks carry a Zacks Rank #2 (Buy).
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Regis (RGS) Beats Q4 Earnings, Misses Revenues, Stock Up
Regis Corp. (RGS - Free Report) posted mixed fourth-quarter fiscal 2016 results wherein the bottom line beat the Zacks Consensus Estimate and the top line lagged the same.
Notably, Regis’ shares were up nearly 2% in yesterday’s trading session on solid bottom-line performance.
Earnings and Revenue Discussion
Adjusted earnings of 12 cents per share beat the Zacks Consensus Estimate of 1 cent and increased substantially from the year-ago figure of 1 cent as well.
The owner, operator and franchisor of hairstyling and hair care salons posted revenues of $447.7 million for the quarter, down 3.3% year over year, owing to lower Service and Product revenues, partially offset by an increase in Royalties and fees revenues. Reported revenues missed the Zacks Consensus Estimate of $457 million by 2%.
Performance in Detail
Consolidated comps in the quarter were down 1.4%. In comparison, comps were down 0.4% in the prior quarter and had declined 0.8% in the year-ago quarter.
Management believes that the shift of Easter from April in last year to March this year impacted same-store sales. Moreover, closing of unprofitable salons and foreign currency hurt revenues. However, this was somewhat offset by one extra calendar day in the quarter and growth in royalties and fees.
Service revenues dipped 3.7% year over year to $348.9 million mainly due to closing of loss-making salons and foreign currency headwinds. Same-store sales decreased 1.6% owing to a 5.1% decline in guest traffic, partially offset by a 3.5% increase in average ticket price.
Product revenues were down 2.2% year over year to $86.7 million. Same-store sales went down 0.8% due to a 0.9% decrease in guest transactions, partly offset by a 0.1% increase in average ticket price.
Royalties and fees revenues were $12.1 million, up 1.4% year over year. Franchisees posted positive same-store sales and the company added 172 net franchised locations in the last 12 months.
Cost of service, as a percentage of service revenues, increased 60 basis points (bps) to 62.1% due to higher health insurance costs and state minimum wage increases, partly offset by lower salon incentives and the timing of Easter Sunday pay.
Cost of product, as a percentage of product revenues, increased 250 bps to 49.5% mainly due to lapping one-time inventory improvements.
General and administrative expenses of $43.5 million decreased 13.2% on a year-over-year basis. The decrease was mainly due to lower incentive costs, certain costs lapping in the prior-year quarter, timing of expenses during the year, cost savings and foreign currency, somewhat offset by planned strategic investments.
REGIS CORP/MN Price, Consensus and EPS Surprise
REGIS CORP/MN Price, Consensus and EPS Surprise | REGIS CORP/MN Quote
Fiscal 2016 Results
The company reported earnings of 6 cents in fiscal 2016, which compared favorably with the year-ago loss of 39 cents. However, total revenue of $1.79 billion declined 2.5% year over year.
Zacks Rank & Stocks to Consider
Regis currently has a Zacks Rank #3 (Hold). Better-ranked stocks in the sector are Big 5 Sporting Goods Corp. (BGFV - Free Report) , Five Below, Inc. (FIVE - Free Report) and ULTA Salon, Cosmetics & Fragrance, Inc. (ULTA - Free Report) . All the three stocks carry a Zacks Rank #2 (Buy).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>