Retail Traffic

While other retailers trim, Regis grows

Even investors who took a haircut in the market need a real haircut. That's helping make Regis Corp. one of the nation's fastest-growing hair salon chains.

Regis is thriving as consumers turn to less expensive alternatives for their hair care needs. The Minneapolis, Minn.-based chain of 9,000 franchised and company-owned stores plans to open 425 new locations in the next year.

And growth will be across all its chains operating under the names Regis Salons, Trade Secret, Supercuts, SmartStyle, Jean Louis David and others.

But that's only half the story. Regis has acquired a number of salon chains — adding more than 6,700 stores in the company's last fiscal year.

“We're a growth company,” says Paul Finkelstein, Regis' president and chief executive officer. “We will buy as many stores as we build.”

Some of its latest acquisitions include Europe's No. 1 salon franchise Jean Louis David, with its 1,200 locations, 560 locations of GGG, and 328 BoRics, including 30 in Kmart stores.

The company holds about a 4% marketshare in the United States, and now has a 2% share in Europe, according to Finkelstein's estimates. “We have a fair share, even though we dwarf our largest competitor,” Finkelstein says.

Growth prospects, according to analysts, are heading in the right direction.

“There are so many salons out there and part of their strategy is acquiring stores,” says analyst Christopher Krueger of Dougherty & Co. in Minneapolis. “Those opportunities will continue indefinitely.”

Growth will be concentrated in Wal-Mart stores and strip centers in the United States. And though there will be about 125 new locations opening in malls, Finkelstein said most of the growth will be outside the mall.

“Our occupancy costs at malls are growing faster than our revenues,” says Finkelstein.

Outside the mall, Regis plans to expand Jean Louis David beyond Manhattan with up to 200 locations in New York state in the next three to five years.

Supercuts and Cost Cutters will also grow by 300 locations by next summer and the company will add about 160 more SmartStyle locations inside Wal-Marts.

Some of the company's growth will come through its franchisors, though Regis controls real estate decisions. And most locations chain-wide are from 800 sq. ft. to 1,500 sq. ft.

For 2003, Regis expects $3 billion in system-wide sales. “Regis has a lot of marketshare to capture,” Krueger says.

Renée DeGross covers retail business and development for The Atlanta Journal-Constitution.

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