Slump in sales takes Regis into the red

By Simon Pitman

- Last updated on GMT

Global hair care specialist Regis has reported a 5.1 percent drop in sales during its fourth quarter, a result that pushed the company into a net loss.

The company’s turnover for the quarter fell from $491.7m in the same period last year, to $466.5m, a result that was put down to the effects of a weakened economy on consumer spending patterns.

Likewise the company was also hit by a write-down of $27.8m during the quarter for its 30 percent ownership in Provaillance, the largest hair salon franchiser in Europe, a cost that was attributable to the big impact the European economy has had on the salon hair category.

Lower sales push the result into the red

The impact of the sales and the added cost of the write-down meant that net profits fell from a positive figure of $23.0m in the same period last year, to register a loss of $4.5m for the current quarter.

“As a result of the difficult economy, we continue to see a frugal customer whose visitation patterns have lengthened. Accordingly this was the first time in the company’s 67-year history that we ended the year with negative same-store sales,”​ said Paul Finkelstein, company CEO.

For the full year 2009 the company recorded a turnover of $1.83bn, compared to $1.86bn in 2008, a fall of 1.6 percent. Net income for the year came in at a loss of $124.4m, compared to a profit of $85.2m in 2008.

Debt reduction is working

However, despite the losses, the company underlined that it has been working towards reducing its debts, a focus that has allowed it to shave $172.5m off the total debt load in the past nine months to reduce the total figure to $643m.

The company re-affirmed its 2010 outlook, estimating same store sales to be in the range of negative 3.0 percent to positive 1.0 percent – an estimate that underlines the problem caused by a lack of visibility.

However, the company did also state that it envisaged its performance would gradually improve throughout fiscal 2010, with a slow first quarter likely to give way to positive sales growth by the end of the year.

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