Regis Revenue Falls 7.8% to $54.3 Million as Salon Traffic Slips

Regis Corporation (NASDAQ:RGS) posted a 7.8% revenue decline to $54.3 million for its fiscal first quarter ended Sept. 30, as salon traffic across the system fell 3.1% and net income dropped to $524,000 from $1.4 million a year earlier.

The franchisor of Supercuts, SmartStyle and Cost Cutters reported diluted earnings of $0.18 per share, down from $0.49. Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) came in at $7.7 million versus $8 million in the prior-year quarter. The company generated $2.6 million in operating cash flow and repaid $7.9 million of debt during the period.

Systemwide sales still managed a 0.2% gain, but the composition matters. At Supercuts, sales rose 2% on the strength of a 3.8% higher average ticket, offsetting a 1.7% traffic decline, President and CEO Susan Lintonsmith said. Company-owned salons had a rougher quarter: sales fell 1.1% while traffic dropped 9.5%.

Where is Regis losing guests?

Lintonsmith said the company's analysis shows most traffic losses in recent years trace back to new guests — the opportunity sits in getting them to come back a second time. Regis is testing offers aimed at first-time customers and has picked Capillary as its new loyalty and customer relationship management (CRM) partner.

Online scheduling is the other lever. Supercuts salons in the Choice Booking pilots, launched in July, generated traffic 3% to 6% higher than control groups and cut failed online booking attempts by 59%. More than 1,400 Supercuts franchise salons — 86% of the brand's franchise base — plus all company-owned Supercuts locations already use some form of online scheduling. A full rollout with seven-day advance booking as the standard is planned within 90 days, with Lintonsmith pointing to a January launch.

Takeaway: better retention and easier booking are the two levers management believes can reverse the traffic slide.

What's happening with company-owned salons?

Regis is making an immediate senior leadership change at its company-owned salons and focusing on staffing, labor productivity and guest retention. Lintonsmith said 34 of 53 low- and underperforming locations targeted by recovery plans have shown improving trailing three-month trends.

For SmartStyle, the company launched a 40-salon pilot in Tampa in October that bundles manager retraining, staffing support, a simplified express menu and a $22 Tuesday haircut offer. Lintonsmith cautioned it's too early to judge the results.

Takeaway: the owned-salon turnaround is measurable and, so far, moving in the right direction.

How is Regis handling closures and debt?

The quarter saw 34 franchise closures, and fiscal 2027 closures are expected to land in a similar range to fiscal 2026. Regis completed 12 franchise salon resales in the quarter after facilitating 92 in fiscal 2026, and it has identified 261 salons owned by 32 owners as candidates for transitions in fiscal 2027. New dashboards and field support aim to flag at-risk locations earlier and speed sales to other operators.

The math is simple. Every 10 franchise closures prevented preserves nearly $80,000 in annual royalty revenue, Lintonsmith said.

Regis ended the quarter with $121.1 million in outstanding debt (excluding deferred financing costs and warrant values) and $30.4 million in available liquidity, including revolver capacity. After reviewing refinancing alternatives, management concluded that refinancing immediately wouldn't deliver sufficient value to shareholders. Lintonsmith said consulted parties wanted to see additional quarters of progress. The plan: re-engage debt markets in early calendar 2027, ahead of a scheduled drop in the call premium from 104% to 101% at the end of June 2027.

Takeaway: no refinancing now, but a defined window opens once the call premium falls.

What about the DOJ inquiry and the shareholder votes?

First-quarter operating income absorbed a $2.5 million accrual tied to a U.S. Department of Justice civil investigative demand concerning a $2 million Paycheck Protection Program loan and its forgiveness, obtained by Alline Salon Group years before Regis acquired it. Regis said it received the demand in November 2025, is cooperating, and can't predict when the matter will resolve. The company is evaluating indemnification rights and other potential recovery sources.

The quarter also included a $2.1 million gain from terminating a previously recorded lifetime benefit obligation. Both items were excluded from adjusted results.

On governance: five of six director nominees failed to win a majority of votes cast at the annual meeting, and the say-on-pay proposal also fell short. Lintonsmith said the board, led by new Chairman Andrew Alfano, is evaluating the results and will disclose its decisions and rationale on the directors within 90 days of the meeting.

Founded in Minneapolis in 1922, Regis operates primarily as a franchisor across the U.S. and Canada through brands including Supercuts, SmartStyle, Cost Cutters, First Choice Haircutters and Roosters Men's Grooming Center.

The bottom line: a softer quarter, yes — but management has put numbers, dates and pilots against every weak spot it named.