REGIS CORP

Regis Corporation franchises and owns hair care salons, operating in the highly fragmented hair salon industry, which encompasses a vast number of operators and generates considerable annual revenue, with the majority of locations being independently owned and operated ¹. The Company faces competition from chains such as Great Clips, Fantastic Sams, Sport Clips and Ulta Beauty, independently owned salons, in-home hair services, booth rentals, and blow dry bars ². At the individual salon level, barriers to entry are low; however, barriers exist for chains to expand nationally due to the need to lease quality sites, recruit franchisees, establish systems and infrastructure, and hire multi-unit and experienced field and salon management ³. The principal factors of competition are the ability to attract, retain, and train quality stylists, provide consistent and exceptional guest experiences, have the right technology tools, and win on convenience and price value ⁴.

The Company's primary competitors include Great Clips, Fantastic Sams, Sport Clips and Ulta Beauty, as well as independently owned salons, in-home hair services, booth rentals, and blow dry bars ⁵. The Company also faces competition from other franchise organizations outside of the hair salon industry in attracting new franchisees ⁶. The Company's competitive advantages include its portfolio of salon concepts, its focus on stylist training and development, and its ability to provide a comprehensive system of business performance coaching, stylist training and education, site approval, professional marketing, promotion, and advertising programs, loyalty and CRM programs, and technology tools to its franchisees ⁷. The Company aims to be an industry leader in stylist training, including the utilization of both live and digital training ⁸.

The Company generates revenue through two operating segments: franchise and company-owned ⁹. In the franchise segment, the Company earns royalty revenue based on service and product sales at franchise locations, as well as initial fees for each salon and ongoing royalties ¹⁰. The Company also collects advertising funds from franchisees for most brands and administers the funds on behalf of the brands ¹¹. In the company-owned segment, the Company earns revenue for services and products sold at its company-owned salons ¹². Service revenues comprise approximately 95% of total company-owned salon revenues ¹³. The Company's business model is primarily asset-light, focused on being a franchisor, but the Alline Acquisition provided a company-owned environment to test, learn and refine initiatives before broader franchise rollout ¹⁴.

The Company's salon concepts include Supercuts, SmartStyle/Cost Cutters in Walmart stores, Portfolio Brands, and International salons ¹⁵. Supercuts salons provide consistent, high-quality hair care services and professional hair care products at value prices, appealing to men, women, and children ¹⁶. The Company has 1,634 franchised and 95 company-owned Supercuts locations throughout North America ¹⁷. SmartStyle and Cost Cutters salons offer a full range of custom styling, cutting, and hair coloring, as well as professional hair care products, and are located in Walmart Supercenters ¹⁸. The Company has 984 franchised SmartStyle and Cost Cutters salons located in Walmart Supercenter locations throughout North America ¹⁹. Portfolio Brands salons are made up of acquired regional salon groups operating under the primary concepts of Cost Cutters, First Choice Haircutters (Canada), Roosters, Hair Masters, Magicuts and Holiday Hair, as well as other concept names ²⁰. The Company has 763 franchised and 169 company-owned Portfolio Brands locations throughout North America ²¹. The Holiday Hair brand is 100% company-owned ²². International salons operate in the United Kingdom, primarily under the Supercuts and Regis concepts, and the Company has 67 licensed international locations ²³.

The Company's salons sell nationally recognized hair care and beauty products, with the top selling brands including L'Oreal Professional Brands and John Paul Mitchell ²⁴. The average service price of transactions ranges from $27 to $39 ²⁵. The Company's marketing is brand specific and funded primarily from contractual contributions, based on sales, to the brand's cooperative advertising funds ²⁶. In fiscal year 2022, the Company sold its proprietary back-office salon management system, Opensalon Pro, to Soham Inc. (Zenoti) ²⁷. As of August 2024, all salons transitioned to the Zenoti salon technology platform ²⁸. The Company also uses mobile applications to allow guests to view wait times and interact in other ways with salons ²⁹.

In December 2024, the Company acquired Super C Group, LLC, doing business as Alline Salon Group (Alline), bringing a portfolio of 314 salons, of which 261 remain in operation as of June 30, 2026, across the Supercuts, Cost Cutters, and Holiday Hair brands ³⁰. The Alline Acquisition was a strategic move that provides a company-owned environment to test, learn and refine initiatives before broader franchise rollout ³¹. The Company's intent is to make the company-owned salon business best in class by proving out operational excellence and piloting programs, including enhanced loyalty and marketing capabilities supported by new technology, that can be tested and refined at Company-owned salons, and, once successful, scaled across the franchise system ³². The Company also implemented a new enterprise resource planning (ERP) system, which was implemented August 1, 2026 ³³. The Company's Board has authorized $650.0 million to be expended for the repurchase of the Company's stock under a stock repurchase program with no stated expiration date ³⁴. During fiscal year 2026, the Company did not repurchase shares ³⁵. As of June 30, 2026, 1.5 million shares have been cumulatively repurchased for $595.4 million, and $54.6 million remained authorized for repurchase ³⁶.

In fiscal year 2026, total consolidated revenues were $224.4 million, compared to $210.1 million in fiscal year 2025 and $203.2 million in fiscal year 2024 ³⁷. Net income was $6.9 million in fiscal year 2026, compared to $123.5 million in fiscal year 2025 and $91.1 million in fiscal year 2024 ³⁸. Operating income was $24.4 million in fiscal year 2026, compared to $19.9 million in fiscal year 2025 and $20.9 million in fiscal year 2024 ³⁹. System-wide revenue was $1,066.3 million in fiscal year 2026, compared to $1,104.9 million in fiscal year 2025 and $1,179.5 million in fiscal year 2024 ⁴⁰. Total system-wide same-store sales increased 0.9% in fiscal year 2026, compared to a decrease of 0.6% in fiscal year 2025 and an increase of 0.7% in fiscal year 2024 ⁴¹.

A key growth vector is the company-owned salon business, which the Company intends to make best in class by proving out operational excellence and piloting programs, including enhanced loyalty and marketing capabilities supported by new technology, that can be tested and refined at Company-owned salons, and, once successful, scaled across the franchise system ⁴². The Alline Acquisition provides a turn-key operating infrastructure and gets the Company closer to salon operations alongside franchisees, and the salon portfolio provides a testing ground for brand and operational initiatives ⁴³. The Company anticipates expanding its use of AI in additional operational and business contexts in fiscal year 2027 and beyond ⁴⁴.

Another growth vector is the continued focus on the franchise business, with the Company's main focus remaining being a franchisor and maintaining an asset-light model, which includes supporting and driving franchisee sales and profitability ⁴⁵. The Company provides franchisees with a comprehensive system of business performance coaching, stylist training and education, site approval, professional marketing, promotion, and advertising programs, loyalty and CRM programs, technology tools, and other forms of ongoing support designed to help franchisees build successful businesses ⁴⁶. The Company also plans to continue expanding its digital marketing efforts, including seeking additional options for loyalty and rewards software to complement its current system ⁴⁷.

The Company's margin and cost outlook is focused on controlling its expense structure, as failure to manage labor and benefit rates, advertising and marketing expenses, professional fees, operating lease costs, other expenses, or indirect spending could delay or prevent the Company from achieving increased profitability ⁴⁸. The Company has implemented cost reduction initiatives and expects to achieve expected cost savings ⁴⁹. The Company's general and administrative expense decreased $4.8 million, or 10.3%, during fiscal year 2026, primarily due to lower corporate compensation and franchise brokerage expenses, as well as lower education event costs, partially offset by higher company-owned general and administrative expense ⁵⁰.

The Company's operational outlook includes the continued operation of its salons, with a focus on attracting, training, and retaining talented stylists and salon leaders ⁵¹. The Company is making significant investments in programs to attract and retain stylists ⁵². The Company has implemented a new enterprise resource planning (ERP) system, which was implemented August 1, 2026, and will continue to require investment of significant capital and human resources ⁵³. The Company relies on external vendors for products and services critical to its operations, including the Zenoti salon technology platform ⁵⁴.

The Company's capital allocation policy is to not pay cash dividends ⁵⁵. The Board has authorized $650.0 million to be expended for the repurchase of the Company's stock under a stock repurchase program with no stated expiration date ⁵⁶. As of June 30, 2026, $54.6 million remained authorized for repurchase, but the Company does not anticipate repurchasing shares of common stock for the foreseeable future ⁵⁷. The Company's ability to make interest payments and comply with debt covenants depends on its ability to generate cash in the future ⁵⁸.

A significant headwind is the potential for increased costs due to minimum wage increases, employment taxes, and overtime pay, which result in an increase in salon operating costs, and the salons' ability to offset these increases through price increases may be limited ⁵⁹. Increases in minimum wages have increased salon operating costs over the last five years ⁶⁰. The Company is also subject to changes in the general economic environment, including recession, inflation, deflation, tax rates and policy, tariffs, energy costs, unemployment trends, extreme weather patterns, viruses, pandemics, stay-at-home orders, and other casualty events that influence consumer confidence and spending ⁶¹.

Another headwind is the potential for a material adverse impact on the business as a result of changes in consumer shopping trends and changes in manufacturer distribution channels ⁶². The Company is experiencing a proliferation of alternative channels of distribution, such as blow dry bars, booth rental facilities, discount brick-and-mortar and online professional product retailers, as well as manufacturers selling directly to consumers online, all of which may negatively affect product and service revenue ⁶³. Remote work arrangements reduce foot traffic in downtowns, city centers, and other business districts where salons are located, causing a reduction in revenue ⁶⁴.

The Company is substantially dependent on franchise royalties and the overall success of its franchisees' salons, with approximately 92.9% of salons being franchised locations as of June 30, 2026 ⁶⁵. Some franchisees have seen a decline in revenues in recent years, which reduces their profitability, and franchise salon closures have increased, reducing royalty income ⁶⁶. The Company's U.S. SmartStyle and Cost Cutters salon operations are dependent on its relationship with Walmart, which is its largest landlord, and Walmart has the right to close up to 100 salons per year for any reason, upon payment of certain buyout fees ⁶⁷. The Company is subject to laws and regulations that could require it to modify current business practices and incur increased costs, including increases in minimum wages, which have increased salon operating costs over the last five years ⁶⁸. The Company may be unable to successfully realize the anticipated benefits of the Alline Acquisition, which depends on its ability to successfully integrate the Alline Stores with its existing limited network of company-owned stores and operate them as company-owned stores ⁶⁹. Alline applied for and received an employee retention credit (ERC) under the CARES Act amounting to approximately $29 million, and as of June 30, 2026, the statute of limitations remains open on $10 million of the total ERC Alline received, and if the IRS audits Alline and finds it was not eligible, Alline would be required to return some or all of the ERC, together with any applicable interest and penalties ⁷⁰.

Management's message emphasizes the Company's vision to define the future of haircare through a scaled portfolio of relevantly differentiated, category-leading brands, powered by digital innovation and operational excellence, to deepen guest loyalty and deliver sustainable long-term growth ⁷¹. The Company's purpose is 'Unleashing the Beauty of Potential,' brought to life through four core values: Own It, Foster Trust, Be Brave, and Create Community ⁷². The strategic priorities emphasized are: making the company-owned salon business best in class by proving out operational excellence and piloting programs, including enhanced loyalty and marketing capabilities supported by new technology, that can be tested and refined at Company-owned salons, and, once successful, scaled across the franchise system ⁷³; maintaining an asset-light model focused on being a franchisor, supporting and driving franchisee sales and profitability ⁷⁴; and continuing to invest in technology, including the new ERP system and AI initiatives ⁷⁵.