Interim Chief Operating Officer Eric Bakken told the Star Tribune that Regis will trim 25 or more of its 50 store brands and convert most of the affected salons to the remaining, strongest-performing brands.
Regis Corporation will eliminate at least half of its 50 store brands in an effort to reduce costs and simplify its business, according to a Star Tribune report.
Interim Chief Operating Officer Eric Bakken told the Minneapolis newspaper that the Edina-based hair salon operator will trim 25 or more of its brands—which now include Supercuts, MasterCuts, SmartStyle, and CostCutters.
The company will reportedly convert most of the affected salons to the remaining, strongest-performing brands like Supercuts, Hair Masters, and First Choice in Canada. The remaining brands will be organized into one of three consumer segments—value, value with full service, and premium.
However, Bakken told the Star Tribune that Regis will need to close some stores. He didn’t provide an exact figure but said less than 10 percent of the company’s 7,500 non-franchise salons will be shuttered.
Regis has bought dozens of regional brands over the years that have increased its sales. But the company operated the individual brands as independent entities, which analysts say has led to a confusing array of overlapping businesses, according to the Star Tribune.
Regis’ move to consolidate its brands follows a contentious proxy battle that ended in October, when company investor Starboard Value LP, a New York-based hedge fund, won three board seats. Starboard owns roughly 5.2 percent of Regis’ stock.
Regis has struggled and trimmed expenses in recent years as consumers have reduced the frequency of their salon visits amid the recession. Its net income dropped more than 79 percent in the fiscal year that ended in June 2011, and it reported a net loss totaling $8.9 million. Revenue, meanwhile, fell about 1.4 percent to $2.32 billion during the period—an improvement from a 3 percent drop the previous year.
Last month, Regis announced that it was laying off 110 corporate employees. Around the same time, Regis President Randy Pearce said that he plans to retire rather than succeed CEO Paul Finkelstein, who is retiring this month. The company had previously announced that Pearce would become CEO following Finkelstein's retirement.
—Christa Meland
(cmeland@tcbmag.com)