Regis Reports 22% Revenue Gain in Q4

Regis (RGS -0.53%), the hair salon franchisor best known for value-driven brands like Supercuts and SmartStyle, reported its Q4 FY2025 earnings on September 3, 2025. The company posted GAAP revenue of $60.4 million, compared to $49.4 million in Q4 FY2024. outperforming recent trends largely due to the acquisition of the Alline Salon Group. Adjusted diluted earnings per share improved from a $(0.84) loss to a $0.74 profit in Q4 FY2025. Profitability metrics improved on an adjusted (non-GAAP) basis during Q3 FY2025, while one-time tax benefits boosted bottom-line results in Q4 FY2025. Overall, the period showed stabilization in key operating numbers and early results from transformation efforts, but was offset by a shrinking franchise base and margin pressure across the business.

About Regis and What Drives Its Business

Regis operates one of the largest salon networks in North America, with most locations run as franchises and a smaller but growing portfolio of company-owned salons. Its best-known brands cater to walk-in and price-focused customers, often in high-traffic locations such as Walmart Supercenters or strip malls. Franchised salons remained the majority as of June 30, 2025, while company-owned salons consisted mostly of Alline locations acquired in December 2024.

Recently, the company's focus has shifted toward transformation efforts. This includes expanding company-owned operations, rolling out new technology platforms, optimizing pricing and services, and improving stylist recruitment and pay structures. Key to its future are franchise health, customer traffic, cost control, and integration of new technology.

What Shaped This Quarter’s Results

Revenue (GAAP) reached $60.4 million in Q4 FY2025, up from $49.4 million in Q4 FY2024, primarily due to the integration of Alline salons into the company-owned segment. Company-owned segment revenue increased by $18.2 million in Q4 FY2025, and by the end of FY2025, company-owned locations totaled 294, compared to just 17 at the same point in FY2024. However, the franchise segment continued to contract, with franchise revenue (GAAP) declining by $7.2 million in Q4 FY2025 due to the closure of 744 franchise locations compared to Q4 FY2024.

System-wide same-store sales comps, which track average sales per salon open at least a year, turned positive at 1.3% in Q4 FY2025 after several periods of decline. Both franchise and company-owned salons reported positive same-store sales comps in Q4 FY2025, but full-year trends remain negative for the company-owned group. Adjusted earnings (non-GAAP) improved significantly, shifting from a loss to a profit in Q4 FY2025 compared to the prior period, as cost controls and positive cash flow from operations continued for a third consecutive quarter.

Margins for the franchise segment improved, with adjusted EBITDA margin rising to 19.3% from 13.7% in Q4 FY2025 versus Q4 FY2024, largely due to lower general and administrative costs. For company-owned salons, adjusted EBITDA rose to $2.0 million in Q4 FY2025, Profitability in Q4 FY2025 benefited from both the Alline deal’s revenue contribution and efforts to close unprofitable salons.

Net income in Q4 FY2025 was heavily influenced by a one-time $115.5 million tax benefit, reflecting the release of a valuation allowance on deferred tax assets. Excluding this benefit and other large non-cash items, adjusted net income was $2.0 million in Q4 FY2025, up from a $2.0 million loss in the prior-year period. The company also expanded its liquidity to $25.9 million as of June 30, 2025, offsetting substantial debt of $125.3 million.

Regis continued to invest in technological upgrades, rolling out the Zenoti salon software platform to both company-owned and franchise locations. This tool enables mobile check-in and real-time wait time updates. The Supercuts Rewards loyalty program, expanded in FY2025, now accounts for a significant share of brand sales. Management cited technology and digital transformation, supported by partner Forum3, as crucial for future customer engagement.

On the personnel front, the company piloted new compensation models in the Alline-acquired salons. Designed to offset rising minimum wage costs and incentivize staff, these pay plans seek to align stylist pay more closely with individual and salon performance metrics. Although the company has not disclosed turnover figures, leadership identified recruitment and training as key strategic areas, investing in both technical and customer service training initiatives.

One-time financial effects significantly affected some headline results. The $115.5 million tax benefit in FY2025 was described by management as a sign of confidence in future taxable income, but it does not represent actual cash earnings. This change is tied to a partial release of the company’s deferred tax asset valuation allowance in Q4 FY2025. Management expects realization of tax-loss carryforwards over time, assuming ongoing profitability.

Looking Ahead: Guidance and Watchpoints

Management did not provide concrete financial guidance for upcoming quarters or for FY2026. This lack of specific outlook leaves investors focusing on ongoing risks: continued franchise contraction, the pace of margin improvement in company-owned salons, and long-term debt service capacity.

The trajectory of same-store sales comps and franchise salon counts will directly affect revenue and royalty income. The company’s ability to turn Alline company-owned salons into margin contributors, improve traffic, retain stylists, and further integrate technology are key to the longer-term outlook. Management’s decision to release its deferred tax asset valuation allowance in Q4 FY2025 signals internal optimism but depends on continued profitability. Until growth in comps and a stable salon count are achieved, the company’s stabilization efforts remain a work in progress.

Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.