Regis Corp. (NYSE:RGS) Q2 2016 Earnings Conference Call - Preliminary Transcript

Jan 28, 2016 • 10:00 am ET


Regis Corp. (NYSE:RGS) Q2 2016 Earnings Conference Call - Preliminary Transcript


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Daniel Hanrahan

assortment and increased combo sales, which are retail sales attached to a service ticket.

During the second quarter, our combo sales percentage of 9.5% increased 120 basis points compared to the prior-year quarter. Our leadership trends improved during the second quarter providing support we're developing in upgrading field leadership talent. During the second quarter, a higher percentage of our regional vice presidents, regional directors and district leaders posted positive comps compared to all of fiscal 2015 and the first quarter of 2016. While encouraging, two underlying trends remain that need to continue to improve to drive long-term sustainable growth.

First, we still have too many negative comping leaders whose results are slowing the momentum of our overall growth. Second, our overall service guest traffic needs to grow. While many of our leaders are driving quarter-over-quarter growth in service guest traffic, we have not yet posted positive growth in service traffic. I will cover what we are doing to address these underlying trends as I update you in a few moments on our progress in leadership development, technical education and asset protection.

During the quarter, we continued to make progress with our digital integration initiatives focused on guest satisfaction, mobile and web check-in, and guest data capture. Since its launch about a year ago, approximately 600,000 people have downloaded our Supercuts mobile app. Visitation to our enhanced Supercuts and SmartStyle websites is up approximately 20% and 40%, respectively, and visitors are spending more time in our content-rich site, engaging with our brand, reading articles, discovering the latest style, viewing products and learning how to use them. Last quarter, I emphasized the convenience of check-in into our salons digitally and how digital check-in is driving improvement in repeat guest visits.

During the second quarter, we surpassed 1 million mobile and web check-ins. We're also leveraging information within our guest database to offer promotions to our guests and upsell add-on services or retail sales in a more targeted fashion. Not only can we tailor our guest messages to drive repeat traffic with service reminders and promotional events, but we can use our digital knowledge to market a guest while in the salon.

On the franchising front, we added 22 new franchisees to the system and opened 65 new franchise salons during the second quarter. These new franchisees are helping to expand our Supercuts footprint and along with our strong existing franchise base, we're contributing to revenue, the Supercuts marketing fund and cash flow improvement. Now, let's cover our progress against our initiatives focused around leadership development, technical education and asset protection.

I'll start with leadership development. Our top priority continues to be the development of our field operations leaders. Having strong field leaders in place is critical to creating a solid foundation for recruiting, coaching, developing and retaining our stylists. This is our means to achieving sustainable growth. While ongoing leadership training and development have become commonplace for our regional vice presidents and regional directors, we continued to extend our reach to our