Regis (NASDAQ:RGS) executives said the company made “continued progress” in its transformation efforts during the fiscal second quarter of 2026, pointing to higher profitability and improved cash generation even as traffic remained the biggest headwind across the system.
Interim CEO Jim Lain told listeners the company is working to build a “more durable, modern, and disciplined” Regis, with a sharper focus on execution and adoption of initiatives across franchisees. CFO Kersten Zupfer added that the quarter’s year-over-year comparisons were materially affected by the company’s December 2024 acquisition of approximately 300 salons from Align, which contributed for a full period this quarter versus less than two weeks in the prior-year period.
Profitability improved while traffic remained a key challenge
Despite those gains, Lain emphasized that traffic remains Regis’ “most significant challenge” and the primary drag on top-line performance. He said pricing actions have supported same-store sales, but the company’s “central objective” is to deliver sustainable traffic improvements. He added that the strategy has not changed since the first quarter, but management is bringing greater rigor to execution through tighter organizational alignment, clearer ownership, disciplined capital deployment, and increased focus on adoption and compliance.
Same-store sales were mixed; Supercuts posted growth
Regis reported that consolidated same-store sales declined modestly by 0.10% in the quarter. Lain highlighted stronger performance at Supercuts, noting the brand delivered same-store sales growth of 2% (as stated on the call) and that Supercuts was up 2% year to date, while consolidated same-store sales were up 0.4% year to date.
Management said it continues to modernize and transform Supercuts, citing improvements in loyalty participation, digital engagement, and execution of brand standards. In December, the company launched pilots aimed at improving customer digital interaction, and it is refining its CRM approach as loyalty membership grows.
Lain said the focus in coming quarters will be on reducing friction, increasing franchisee adoption and compliance, and generating measurable traffic lift through targeted pilots that can be scaled.
Company-owned salons delivered sales growth; Align integration actions outlined
The company-owned salon group was described as an increasingly important strategic asset, both for financial contribution and as a “center of excellence” to test and refine operating practices for the broader franchise system. For the quarter, those salons delivered sales growth of 4.3%, according to Lain.
Regis also discussed the rollout of a new stylist pay plan introduced in the first quarter to support a more productivity-driven model. Lain acknowledged early implementation required refinements and that the timing of pricing actions created near-term margin pressure. During the second quarter, Regis implemented targeted actions including service pricing adjustments and the rollout of a labor optimization tool. He said early signs showed better alignment with margin expectations and that performance trajectory is improving.
In the question-and-answer portion, Lain provided additional detail on initiatives to improve the Align-acquired stores, describing three main components:
- Refinements to the pay plan, which he said required “tweaking” to improve performance without materially impacting stylists.
- Pricing actions, including further price adjustments taken in early December, along with changes to “commensurate tiers” to preserve intended margins under the pay plan.
- Labor optimization using machine learning to analyze sales by hour and identify over- and understaffing, with early results showing opportunities to address overstaffing.
Lain said the labor optimization effort is still early and will take the rest of the current quarter to better understand results and potential tweaks, but he expressed encouragement about what he is seeing.
Revenue rose on Align acquisition; franchise base continued to shrink
Zupfer reported total second-quarter revenue of $57.1 million, up 22.3% or $10.4 million from the prior year, primarily due to higher company-owned salon revenue from the Align acquisition. The revenue increase was partially offset by lower royalties and fees and lower non-margin franchise rental income, the company said.
Regis reported a net decrease of 374 franchise locations compared with December 31, 2024. Of those closures, 96 occurred in the six months ended December 31, 2025. Management said it expects closures in the second half of fiscal 2026 to be in the same range as the first half.
Zupfer said the year-over-year closures primarily involved underperforming stores with much lower trailing 12-month sales than top-performing units, with an approximate $350,000 gap between those stores and the highest performers. In Q&A, Lain agreed with an investor characterization that the pace of closures this year appears roughly half of the prior year’s level.
Operating income increased; cash generation and refinancing questions addressed
Regis reported GAAP operating income of $6.2 million, up $0.7 million from $5.5 million a year ago. Income from continuing operations was approximately $456,000, compared with $206,000 in the year-ago quarter. Management attributed the improvement primarily to increased contribution from company-owned salons and reductions in G&A, partially offset by lower contribution from higher-margin royalty revenues.
On an adjusted basis (excluding stock-based compensation), consolidated adjusted EBITDA rose to $8.0 million from $7.1 million. Adjusted G&A was $9.8 million, up from $9.6 million, with incremental G&A tied to additional company-owned salons partially offset by lower corporate costs. Franchise segment adjusted EBITDA was $6.2 million, down slightly from $6.4 million, while franchise adjusted EBITDA margin improved to 16.5% from 14.8%. Company-owned segment adjusted EBITDA improved $1.1 million year over year to $1.8 million.
Regis generated $1.5 million of unrestricted cash from operations in the second quarter and $3.9 million year to date, Lain said. Zupfer added that for the six months ended December 31, 2025, cash from operations totaled $3.9 million, an improvement from $787,000 in the prior-year period. She also emphasized the distinction between unrestricted cash from operations and restricted ad fund cash, noting the first-half operating cash flow included $200,000 of ad fund cash usage and $4.2 million generated from core operations.
As of December 31, 2025, Regis reported $27.4 million of available liquidity, including revolver capacity, and $18.4 million in unrestricted cash and cash equivalents. Outstanding debt was $126 million, excluding deferred financing costs, warrants, and accrued paid-in-kind interest. Zupfer also cited approximately $208 million of operating lease liabilities related to franchise salon leases, noting these are serviced by franchisees and have a weighted average remaining term of less than five years.
On refinancing, Zupfer said the company continues to receive shareholder questions and that while the current interest rate is higher than recent market levels, refinancing economics depend on terms such as prepayment penalties and fees. She said refinancing may become viable after the two-year anniversary of the agreement in June 2026, and that Regis is speaking with potential partners as it nears that date. When asked for preliminary feedback on rates, management said it could not share additional details yet but confirmed initial conversations with potential advisors.
Management also addressed brand and growth questions, saying there is no “all-out effort” to add Cost Cutters locations, though some are coming online where a franchisee has converted a defunct haircutting business. On loyalty adoption in SmartStyle and Cost Cutters, Lain said it is lagging because those brands launched loyalty later than Supercuts, but he said adoption is growing and in some cases ramping faster than Supercuts did early on.
Finally, Regis said the board continues to evaluate options for the next CEO, with Lain continuing to run the organization in close partnership with the board.
About Regis (NASDAQ:RGS)
Regis (NASDAQ: RGS) is a company that owns, operates and franchises a portfolio of hair salon and beauty service brands. Its business centers on providing haircutting, styling, coloring and other salon services through both company-owned and franchised locations. The company’s brand portfolio includes well-known names in the haircut and salon market that serve a range of customer segments from value-focused walk-in haircuts to full-service salon experiences.
Regis generates revenue through salon operations, franchise fees and the sale of professional hair-care products and retail items.
