Profits take a dive for hair care player Regis

By Simon Pitman

- Last updated on GMT

Hair care player Regis has reported a big dip in its fourth quarter
profits as the company battles increasing competition in the salon
hair care sector and the fact that last year's results benefited
from a penalty fee over a failed acquisition bid.

Having already reported its revenues for the fourth quarter on July 12, the company said that net income fell by 48.7 percent, from €41.5m in the fourth quarter of 2006, to $27.8m. The quarterly figures were hit by a slight decrease in operating income, but the comparative figure for the quarter in 2006 was positively impacted by a penalty fee of nearly $39m paid to the company by Alberto-Culver after it backed out of a take-over deal. Taking the penalty into consideration, the results do indicate that the underlying trend is improving for the company, stressed by the fact that sales for the quarter looked more optimistic, up 6.2 per cent to reach $675m. Although this figure was still slightly less than analysts had expected it was at the upper end of the company's own expectations. The company is now forecasting revenue of between $665m and $675m for the first quarter of 2008, in contrast to analysts who are currently forecasting revenue of $653.6m on average. For the full year 2007 sales were up 8 per cent, from $2.43bn in 2006 to reach $2.67bn, slightly up on the company's own forecast of $2.64bn. However, net profit for the year was down 23.4 percent, from $109.6m in 2006 to reach $83.2m, a figure that was again mainly impacted by the Alberto-Culver penalty fee. "Fiscal year 2007 was the continuation of a very challenging period for the salon industry,"​ said Paul Finkelstein, Regis CEO, adding his belief that, "The reality of the product business is that it is much more competitive today" ​ The company, which owns the Vidal Sassoon, Supercuts and Jean Louis David hair care and beauty chains, said that during the year it had added a net total of 550 locations to its worldwide chain, bringing the total number to 12,400 worldwide. The company is a leading player in teh $150 billion hair care industry and derives a significant part of its revenues from the sale of a wide range of hair care products.

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