Regis Corp (RGS)

NetscribeServcs (< 20) Submitted: 3/27/07 9:12 AM : Start Price: $40.28 RGS Score: -10.91

Regis Corp., (RC) is beauty industry's global leader in beauty salons, hair restoration centers and education, aims to provide high quality affordable hair care services and products to a wide range of customers through salons located in high traffic and convenient locations. As of December 31, 2006, RC’s worldwide operations included 11,570 company-owned and franchise salons, 88 hair restoration centers and 55 beauty schools.


In fiscal 2007, revenues improved by 9% to $1.3 billion reflecting increase in service revenues from salons in North America & international market and higher product sales from beauty schools division & hair restoration centers. North American salons contribute over 80% to revenues.


RC intends to continue with its expansion plans through organic growth and acquisitions. With only about 2% of the worldwide market for hair care service and products, RC believes future growth opportunities are ample. It’s expanding further in North America, the United Kingdom and continental Europe. RC is likely to enter the Japan market through a partnership with Wal-Mart in the next six months. It’s expected to enhance revenues and will enhance its brand awareness in international market. Launch of Intelligent Nutrients with industry legend Horst Rechelbacher will likely provide a small boost to sales.


RC’s large size enables it to enjoy economies of scale. As overall populations continues to focus more on personal health and beauty, demand for salon services, professional products and hair restoration services will continue to increase. Softening of US salon industry will also add to demand. With a 17.06 price earning ratio multiple, well below the industry ratio, the company has endowed with enough opportunities to nurture. But strong expansion plans and operating efficiency will enable it to bridge this gap.

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