Regis Reports Third Quarter 2010 Earnings

Regis Corporation (NYSE:RGS), the global leader in the $150 billion to $170 billion hair care industry, today reported third quarter breakeven EPS, which includes a non-cash, after-tax impairment charge of $23.4 million related to the Company’s Regis salon division. Absent this non-operational item, third quarter operational earnings were $0.37 per diluted share. A complete reconciliation of reported earnings to operational earnings is included in today’s press release. A more comprehensive reconciliation is available on the Company’s website at www.regiscorp.com.

On April 8, 2010, the Company reported that revenues for the third quarter ended March 31, 2010 decreased 2.7 percent to $588 million, including a decline in consolidated total same-store sales of 1.8 percent.

"We saw a gradual improvement in our overall same-store sales results in the quarter, and the month of March was our best month in a long-time with flat North American same-store sales. Our value priced concepts continue to perform better than our higher price point Regis division,” commented Paul D. Finkelstein, Chairman and Chief Executive Officer. "Our third quarter results mirrored those of the previous two quarters as we continue to benefit from initiatives to improve gross margins and reduce expenses. After adjusting last year’s results for the impact of our recent equity and convertible note issuance, our third quarter operational earnings of $0.37 per share exceeded last year’s adjusted operational results of $0.36 per share.

"We did incur a $33 million pre-tax charge related to the write-down of goodwill in the Regis salon division. Higher-end retailers have borne the brunt of the recession to a greater degree than value retailers, and the Regis division is no exception. Customers have lengthened their visitation patterns and reduced mall traffic has led to a decline in our walk-in customer base. Revenues in the Regis division are expected to decline from $514 million in fiscal 2008 to an estimated $450 million in fiscal 2010. We remain confident in the Regis division business model. The Regis division continues to generate considerable cash flow and the business shows signs of stabilizing. We will make the necessary investments to improve the Regis division, and as a result we expect to see a significant turn-around during the next year or two.”

Mr. Finkelstein concluded, "I would like to provide some insight into our current internal fiscal 2010 and 2011 expectations. For fiscal 2010, we now believe EBITDA should approximate $250 million. With a slow economic recovery, we expect a continued, gradual improvement in customer visitation trends throughout fiscal 2011. As a result, we believe same-store sales could be in the range of negative one percent to positive two percent. At these same-store sales levels, and before any investment to reinvigorate the Regis salon division, EBITDA should be in a range of $235 million to $270 million. Our growth plans remain modest, and, consistent with fiscal year 2010 levels, we plan to build 160 new salon locations. We expect to spend approximately $95 million for salon and corporate capital expenditures and approximately $25 million for acquisitions. The 2011 capital expenditure budget incorporates approximately $80 million for maintenance, including an incremental $15 million related to several new technology enhancements, including an upgrade to our current salon point-of-sale system. Finally, we plan to generate excess cash of approximately $55 million to $80 million during fiscal 2011.”

As of March 31, 2010 Regis Corporation owned, franchised, or held ownership interest in 12,748 worldwide locations.

As required by accounting convention, the Company will record in its fourth fiscal quarter an additional $0.05 per diluted share of non-operational tax expense related to the third quarter Regis salon division impairment charge.

Regis Corporation will host a conference call discussing third quarter results today, April 28, 2010 at 10 a.m., Central time. Interested parties are invited to listen by logging on to www.regiscorp.com or dialing 877-941-2927. A replay of the call will be available later that day. The replay phone number is 800-406-7325, access code 4269750#.

About Regis Corporation

Regis Corporation (NYSE:RGS) is the beauty industry’s global leader in beauty salons, hair restoration centers and cosmetology education. As of March 31, 2010, the Company owned, franchised or held ownership interests in over 12,700 worldwide locations. Regis’ corporate and franchised locations operate under concepts such as Supercuts, Sassoon Salon, Regis Salons, MasterCuts, SmartStyle, Cost Cutters, Cool Cuts 4 Kids and Hair Club for Men and Women. In addition, Regis maintains an ownership interest in Provalliance, which operates salons primarily in Europe, under the brands of Jean Louis David, Franck Provost and Saint Algue. Regis also maintains ownership interests in Empire Education Group in the U.S. and the MY Style concepts in Japan. System-wide, these and other concepts are located in the U.S. and in over 30 other countries in North America, South America, Europe, Africa and Asia. For additional information about the company, including a reconciliation of non-GAAP financial information and certain supplemental financial information, please visit the Investor Information section of the corporate website at www.regiscorp.com. To join Regis Corporation’s email alert list, click on this link: http://www.b2i.us/irpass.asp?BzID=913&to=ea&Nav=1&S=0&L=1

This press release contains "forward-looking statements” within the meaning of the federal securities laws, including statements concerning anticipated future events and expectations that are not historical facts. These forward-looking statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. The forward–looking statements in this document reflect management’s best judgment at the time they are made, but all such statements are subject to numerous risks and uncertainties, which could cause actual results to differ materially from those expressed in or implied by the statements herein. Such forward-looking statements are often identified herein by use of words including, but not limited to, "may,” "believe,” "project,” ”forecast,” "expect,” "estimate,” "anticipate” and "plan.” In addition, the following factors could affect the Company’s actual results and cause such results to differ materially from those expressed in forward-looking statements. These factors include competition within the personal hair care industry, which remains strong, both domestically and internationally; price sensitivity; changes in economic conditions, and in particular, continued weakness in the U.S. and global economies; changes in consumer tastes and fashion trends; the ability of the Company to implement its planned spending and cost reduction plan and to continue to maintain compliance with the financial covenants in its credit agreements; labor and benefit costs; legal claims; risk inherent to international development (including currency fluctuations); the continued ability of the Company and its franchisees to obtain suitable locations and financing for new salon development and to maintain satisfactory relationships with landlords and other licensors with respect to existing locations; governmental initiatives such as minimum wage rates, taxes and possible franchise legislation; the ability of the Company to successfully identify, acquire and integrate salons that support its growth objectives; the ability of the Company to maintain satisfactory relationships with suppliers; the ability of the Company to consummate the planned closure of salons and the related realization of the anticipated costs, benefits and time frame; or other factors not listed above. The ability of the Company to meet its expected revenue target is dependent on salon acquisitions, new salon construction and same-store sales increases, all of which are affected by many of the aforementioned risks. Additional information concerning potential factors that could affect future financial results is set forth in the Company’s Annual Report on Form 10-K for the year ended June 30, 2009. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. However, your attention is directed to any further disclosures made in our subsequent annual and periodic reports filed or furnished with the SEC on Forms 10-K, 10-Q and 8-K and Proxy Statements on Schedule 14A.

FINANCIAL INFORMATION BY SEGMENT:

Financial information concerning the Company’s salon, and hair restoration businesses is shown in the following tables.

REGIS CORPORATION (NYSE: RGS)

NON-GAAP FINANCIAL MEASURES (Unaudited)

The Company’s press release announcing results of operations for the three month period ended March 31, 2010 includes references to the following "non-GAAP financial measures” as defined by Regulation G of the Securities and Exchange Commission:

• Third quarter breakeven EPS includes a non-cash, after-tax impairment charge of $23.4 million related to the Company’s Regis salon division. Absent this non-operational item, third quarter operational earnings were $0.37 per diluted share.
• After adjusting last year’s results for the impact of our recent equity and convertible note issuance, our third quarter operational earnings of $0.37 per share exceeded last year’s adjusted operational results of $0.36 per share.

Non-GAAP Diluted Net Income Per Share

The table below is provided to assist the reader’s understanding of the three month period ending March 31, 2010 earnings. The Company believes that adjusted net income per diluted share from operations, a non-GAAP financial measure, is a useful basis to compare the Company’s results against, because unusual items during the three month period ending March 31, 2010, impacted the Company’s reported net loss (see "Adjustments” in table below). The presentation below reconciles as reported net loss per diluted share (U.S. GAAP amounts) to adjusted net income per diluted share from operations. The adjusted net income per diluted share information should not be construed as an alternative to reported results under U.S. GAAP.