Regis (NASDAQ:RGS) reported lower revenue and profit for its fiscal first quarter as salon traffic declined, while management outlined plans to improve guest retention, slow franchise closures and turn around company-owned locations.
Revenue for the quarter ended Sept. 30 fell 7.8% from a year earlier to $54.3 million, primarily because of lower franchise rental income and company-owned salon revenue. Net income declined to $524,000, or $0.18 per diluted share, from $1.4 million, or $0.49 per share.
Adjusted EBITDA was $7.7 million, down from $8 million a year earlier. Regis generated $2.6 million in operating cash flow and repaid $7.9 million of debt during the quarter.
Systemwide sales rose 0.2%, although traffic fell 3.1%. At Supercuts, sales increased 2%, driven by a 3.8% increase in average ticket that offset a 1.7% decline in traffic, President and CEO Susan Lintonsmith said. Company-owned salon sales fell 1.1%, while traffic dropped 9.5%.
Regis targets traffic and salon performance
Lintonsmith said the company’s analysis shows that most of its traffic losses over recent years have come from new guests, with an opportunity to improve retention after their first visit. Regis is testing offers aimed at attracting first-time customers and encouraging second visits, and has selected Capillary as its new loyalty and customer relationship management partner.
The company is also expanding online scheduling at Supercuts. Lintonsmith said salons participating in its Choice Booking pilots, launched in July, generated traffic 3% to 6% higher than control groups and reduced instances in which customers could not complete an online booking by 59%.
More than 1,400 Supercuts franchise salons, or 86% of the brand’s franchise locations, and all company-owned Supercuts salons participate in some form of online scheduling. Regis plans a full rollout with seven-day advance booking as the standard within 90 days, with Lintonsmith later saying the launch is planned for January.
At company-owned salons, Regis is making an immediate senior leadership change and focusing on staffing, labor productivity and guest retention. Lintonsmith said 34 of 53 low- and underperforming locations targeted by recovery plans had shown improving trailing three-month trends.
For SmartStyle, Regis launched a 40-salon pilot in Tampa in October that includes manager retraining, staffing support, a simplified express menu and a $22 Tuesday haircut offer. Lintonsmith said it was too early to assess the results.
Closures and refinancing remain in focus
Regis reported 34 franchise closures in the first quarter and expects fiscal 2027 closures to be in a similar range to fiscal 2026. Lintonsmith said the company is using new dashboards and field support to identify at-risk locations earlier and facilitate sales to other operators.
The company completed 12 franchise salon resales in the first quarter after facilitating 92 in fiscal 2026. It has identified 261 salons owned by 32 owners for potential transitions in fiscal 2027. Lintonsmith said every 10 franchise closures prevented preserves nearly $80,000 in annual royalty revenue.
Regis ended the quarter with $121.1 million in outstanding debt, excluding deferred financing costs and the value of warrants, and $30.4 million in available liquidity, including capacity under its revolving credit facility.
After reviewing refinancing alternatives, management determined that refinancing immediately would not provide sufficient value to shareholders. Lintonsmith said parties consulted wanted to see additional quarters of progress. Regis plans to re-engage with debt markets in early calendar 2027 ahead of a scheduled reduction in its call premium from 104% to 101% at the end of June 2027.
DOJ inquiry and shareholder votes
First-quarter operating income included a $2.5 million accrual related to a U.S. Department of Justice civil investigative demand concerning a $2 million Paycheck Protection Program loan and loan forgiveness obtained by Alline Salon Group several years before Regis acquired it. The company said it is cooperating with the inquiry and evaluating indemnification rights and other potential sources of recovery.
Regis said it received the demand in November 2025 and could not predict when the matter would be resolved. Its quarterly results also included a $2.1 million gain from the termination of a previously recorded lifetime benefit obligation. Both items were excluded from adjusted results.
During the question-and-answer session, management addressed annual meeting results in which five of six director nominees did not receive a majority of votes cast and the say-on-pay proposal also failed to receive majority support. Lintonsmith said the board, led by new Chairman Andrew Alfano, is evaluating the results and will disclose its decisions and rationale concerning the directors within 90 days of the meeting.
About Regis (NASDAQ:RGS)
Regis Corporation (NASDAQ: RGS) is a hair care and salon company that operates primarily as a franchisor in the United States and Canada. Its salon network provides haircutting, hairstyling, hair coloring, waxing and related personal-care services, along with professional hair care products.
The company’s portfolio includes well-known salon brands such as Supercuts, SmartStyle, Cost Cutters, First Choice Haircutters and Roosters Men’s Grooming Center. These brands serve a broad customer base through locations operated by franchisees, as well as a limited number of company-operated salons and other affiliated locations.
Founded in Minneapolis in 1922, Regis expanded through the development and acquisition of salon brands and has historically operated one of the largest networks of hair salons in North America.
