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Continuation of Regis initiative to enhance profitability
10 Jul '08
2 min read
Regis Corporation announced plans to close up to 160 underperforming company-owned salons in fiscal year 2009. The decision is a result of a comprehensive evaluation of Regis' salon portfolio, further continuing the Company's initiatives to enhance profitability.
“Over the last 18 months, we have implemented a series of strategic initiatives focused on enhancing profitability by optimizing our cost structure,” commented Paul D. Finkelstein, Chairman and Chief Executive Officer.
“We have expanded this initiative to include a comprehensive review of our 8,500 company-owned salons and we have identified for potential closure approximately 160 salons that do not meet our operating criteria. Closing these salons prior to their lease expiration dates eliminates a significant time drain on supervisory and corporate personnel and will be accretive to our bottom line profitability.”
The majority of the salon closures are planned to occur in the first half of fiscal year 2009. Approximately 100 locations are regional mall based concepts, another 40 locations are strip center concepts and 20 locations are in the United Kingdom. The timing of the closures is dependent on successfully completing lease termination agreements and is therefore subject to change. Regis expects to offer employment to associates affected by such closings at nearby Regis-owned salons.
The Company anticipates the pre-tax charge for the store closings could total approximately $20 to $25 million. This includes approximately $4.5 million, or $0.06 to $0.07 per share, of incremental non-cash fixed asset write-downs which have been recognized in the fourth quarter of fiscal year 2008. The balance of approximately $15 to $20 million is related to lease termination costs and is expected to be recognized primarily in the first half of the Company's current 2009 fiscal year.
Regis Corporation is scheduled to announce fourth quarter 2008 earnings results on August 20, 2008. A conference call discussing fourth quarter results will follow at 4:00 p.m. Central time. At that time, the Company will provide additional comments and address the impact of store closures on its fiscal year 2009 guidance.
“Over the last 18 months, we have implemented a series of strategic initiatives focused on enhancing profitability by optimizing our cost structure,” commented Paul D. Finkelstein, Chairman and Chief Executive Officer.
“We have expanded this initiative to include a comprehensive review of our 8,500 company-owned salons and we have identified for potential closure approximately 160 salons that do not meet our operating criteria. Closing these salons prior to their lease expiration dates eliminates a significant time drain on supervisory and corporate personnel and will be accretive to our bottom line profitability.”
The majority of the salon closures are planned to occur in the first half of fiscal year 2009. Approximately 100 locations are regional mall based concepts, another 40 locations are strip center concepts and 20 locations are in the United Kingdom. The timing of the closures is dependent on successfully completing lease termination agreements and is therefore subject to change. Regis expects to offer employment to associates affected by such closings at nearby Regis-owned salons.
The Company anticipates the pre-tax charge for the store closings could total approximately $20 to $25 million. This includes approximately $4.5 million, or $0.06 to $0.07 per share, of incremental non-cash fixed asset write-downs which have been recognized in the fourth quarter of fiscal year 2008. The balance of approximately $15 to $20 million is related to lease termination costs and is expected to be recognized primarily in the first half of the Company's current 2009 fiscal year.
Regis Corporation is scheduled to announce fourth quarter 2008 earnings results on August 20, 2008. A conference call discussing fourth quarter results will follow at 4:00 p.m. Central time. At that time, the Company will provide additional comments and address the impact of store closures on its fiscal year 2009 guidance.
Regis Corporation
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