Regis Corporation (NYSE:RGS) has announced that it will be closing 600 underperforming SmartStyle hair salons by January 31, 2018. These salons are all located inside Wal-Mart Stores Inc (NYSE:WMT) brand department stores.
All of the salons that will be closed by the end of the month are owned and operated by the company. This will account for a decrease of approximately of 6.7% in Regis’ overall store count.
The goal going forward, as outlined by president and chief executive officer Hugh Sawyer, is to focus on the 2,000 SmartStyle salons that will continue operations. In terms of ownership of the salons, Regis is planning to refranchise them and allow for independent ownership.
This is not the only move that has been taken by Regis to strengthen its business. Previously, the company agreed to sell off its franchising locations in malls and international locations. This included selling off 1,000 salons to Los Angeles-based private equity firm Regent L.P.
Regis did not release information regarding how many employees would be impacted by the store closures. Sawyer has stated that top talented individuals should be offered a position within the company if they are displaced. This will still result in their being individuals that will be looking for new employment opportunities.
Regis is still expected to report lower revenue for the coming year due to restructuring costs related to the store closings and the possibility of having to pay severance for those who worked for the closing SmartStyle locations.
“Regis Successfully Completes Restructuring of Company Owned SmartStyle Portfolio,” Regis Corporation, January 8, 2018.
“Regis closing 600 salons in Walmarts,” St.Louis Post-Dispatch, January 8, 2018.
“Regis will close hundreds of Smartstyle salons,” Minneapolis/St.Paul Business Journal, January 8, 2018.