Regis Corporation (RGS: RGS) owns, operates, and franchises hair and retail product salons around the world. In addition, the company owns and operates hair restoration centers and beauty schools. The company's portfolio of salons includes a wide variety of concepts, including Regis Salons, Supercuts, Trade Secret, SmartStyle, and Vidal Sassoon, among others. Each of the company's salon concepts provide similar services and products, and are targeted towards the mass-market consumer marketplace. The company owned, franchised, or held an ownership interest in over 12,700 salons and 90 hair restoration centers. In addition, the company holds a 49% ownership in 88 beauty schools. In 2010, Regis made $42.7 million of revenues of $2.4 billion.
There are primarily two ways for Regis to grow its business: either by increasing the number of customer visits per store or by increasing the number of stores. Regis currently only has 4% market share in North America and 2% market share worldwide. Two of the customer centricity iniatives, aimed to boost customer traffic, are customer relationship management (CRM) and net promoter score. Regis is building up customer database and has contact information of 1.7 million customers. A 1% increase in net promoter score, which is used by companies to measure customer experience, will increase store sales by 0.5%. In addition, Regis will be adding 285 new salon locations in 2012.
Although the broader salon industry fell by 2% per year for the last three years, the organic salon segment grew by 17% per year. The media attention over the dangers of many of the carcinogenic toxins in beauty products have driven both salon clients and stylists to organic salon. Organic salons charge a 12-16% premium and customers are willing to pay. Regis, traditionally known for its mass-market appeal, has suffered in this segment. In 2010, Regis was forced to right off a $25.7 million loss on its investment in Provalliance which failed to produce a professional organic brand of shampoo and conditioner with broad consumer appeal.
Regis' hair salon business is heavily dependent upon the overall economic conditions of the United States and Europe, where Regis has 9,525 and 404 salons respectively. With the economy still coming out of the recession, consumers are likely to reduce their discretionary spending. This leads customers to length their visitation patterns, forgo salon treatments or using home treatments as a substitute. Hair restoration patients will also decrease the amount spent on hair restoration treatments. Regis' same store results for 2010 were 3.2% lower than 2009.
Regis is by far the largest hair salon chain in the world, employing 53,000 stylists. There is no equal rival to this company in North America, however, there are several smaller companies overseas.