Regis profits drop on increased expenses

By Simon Pitman

- Last updated on GMT

Related tags Quarter Remainder

Hair care specialist Regis says that increases in operating
expenses have led to a drop in its profits during the second of
2007, despite sales continuing to increase.

Sales during the quarter ending December 31 jumped 8 per cent, up from $607m in the corresponding period the previous year to $657m.

But this increase was not matched by the company's profit performance.

Net income fell from $27.3m in the corresponding quarter the previous year, to reach $26.9m for the current second quarter, due mainly to a rise in expenses such as cost of services.

In total operating expenses for the period were up from $556m the previous year, to reach $610m for the most recent quarter.

Regis has been fighting to re-ignite its business following its failed buy out by Alberto-Culver last year. Although the company received a $50m payment after Alberto-Culver backed out of the deal, it has still left it struggling to fund further expansion independently.

However, despite the disappointing operating results, the company says that it is expected to see continued momentum in sales growth, born mainly off the fact that women are picking up on the trend for stars to have shorter hairstyles.

According to the company this is encouraging females to adopt the same habit, consequently making more frequent visits to hair salons and buying more hair care products.

The company also pointed out that it added a total of 79 new hair salons to its total during the second quarter, additions that are likely to have an even greater bearing during the remainder of the financial year.

"We are encouraged by the initial signs of recovery in our business during the second quarter,"​ said Paul Finkelstein, CEO for Regis.

He went on to point out that same-store sales had increased by 1.3 per cent, compared to 0.7 per cent increase during the same period last year.

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