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Idea performance


1

Update 7/2/13

• The deterioration in business fundamentals continues as the L3M comparable

salon sales decline of -1.4% YoY (vs. -1.9% last quarter) and investment in higher

stylist hours caused LTM Adj. EBITDA drop to ~$130m

• Results in an implied EV to LTM Adj. EBITDA multiple of ~7.5x for Restructured

Regis

Restructured Regis enterprise value Restructured Regis EBITDA

Current share price $16.66 LTM NA salon revenue 1,911

Common shares outstanding 56.7 Consolidated LTM adj. EBITDA 138

Shares underlying convertible senior notes 11.2 Less: International salon LTM adj. EBITDA 7

Shares underlying options 0.0 Adj. EBITDA 131

Fully diluted shares 67.9 Adj. EBITDA margin 6.9%

Market capitalization 1,131

Implied EV/EBITDA 7.5x

Add:

Credit line borrowings ($400m capacity) 100

Equipment and leasehold notes payable 10

Other notes payable 0

Convertible senior notes assumed converted @ $15.35 172.5

Less:

Cash 180

Enterprise value 1,061

Less:

International salons (UK) For sale 30

Empire Education Group Fix / for sale 45

Implied Restructured Regis enterprise value 985


2

Update 7/2/13

• At 7.5x LTM EBITDA and roughly 10.0x forward EBITDA (assuming a depressed

L3M EBITDA margin of 5.3% going forward), market participants are clearly pricing

in continued improvement in comparable salon sales to above 0%

*Excludes divested Hair Club operations FYE 06/30 FYE 06/30 Last QE 9/30 QE 12/31 QE 3/31 QE 6/30 QE 9/30 QE 12/31 QE 3/31

2011 2012 12 months 2011 2011 2012 2012 2012 2012 2013

Services 1,695.4 1,643.9 1,585.7 415.0 404.0 413.0 411.9 393.4 388.3 392.1

Products 447.5 440.0 421.0 106.8 112.9 113.2 107.2 102.3 108.2 103.2

Royalties and fees 37.3 38.3 38.6 9.6 9.2 9.8 9.7 9.7 9.6 9.6

Total revenue 2,180.2 2,122.2 2,045.3 531.3 526.1 535.9 528.8 505.4 506.2 504.9

Cost of service 972.9 941.7 936.3 235.7 231.4 239.4 235.2 232.5 234.3 234.3

Cost of product 225.2 221.6 216.2 53.0 57.0 56.9 54.7 53.1 55.1 53.3

Site operating expenses 211.8 206.2 206.2 54.8 51.5 50.8 49.1 52.3 51.0 53.7

General and administrative 246.6 233.6 221.9 63.1 60.9 54.7 55.0 56.2 54.8 55.9

Rent 333.1 331.8 327.0 82.2 83.2 82.2 84.2 81.5 80.6 80.8

Depreciation and amortization 92.2 88.9 86.9 22.1 22.1 22.4 22.4 20.7 21.9 22.0

Adjusted operating expenses 2,081.7 2,023.8 1,994.6 510.9 506.1 506.2 500.6 496.4 497.6 500.0

Adjusted operating income 98.5 98.5 50.7 20.5 20.1 29.7 28.3 8.9 8.6 4.9

Add: depreciation and amortization 92.2 88.9 86.9 22.1 22.1 22.4 22.4 20.7 21.9 22.0

Adjusted EBITDA 190.6 187.4 137.6 42.6 42.2 52.0 50.6 29.6 30.5 26.9

Reference:

Service margin 42.6% 42.7% 41.0% 43.2% 42.7% 42.0% 42.9% 40.9% 39.7% 40.2%

Product margin 49.7% 49.6% 48.6% 50.3% 49.5% 49.7% 48.9% 48.1% 49.1% 48.4%

Operating margin 4.5% 4.6% 2.5% 3.9% 3.8% 5.5% 5.3% 1.8% 1.7% 1.0%

EBITDA margin 8.7% 8.8% 6.7% 8.0% 8.0% 9.7% 9.6% 5.9% 6.0% 5.3%

Comparable salon sales growth -1.7% -3.1% -3.4% -3.3% -3.9% -3.3% -3.1% -1.9% -1.4%


3

Update 7/2/13

• To own the stock at this valuation, you must believe management’s turnaround

strategies are rational and can be executed such that comp sales improve

materially from here (1% comp sales change equals ~$9m EBITDA change)

• That said, the behavioral clues suggestive of turnaround progress are mixed

• Negative?: Starboard Value, the activist fund that initiated the turnaround,

reduced its RGS long position in Q4’12 to ~1m shares, from ~2.75m shares

• Positive?: RGS amended its poison pill on 6/13/13 so that owners can breach

the 15% ownership threshold without triggering the pill, which suggests either

Birch Run (PM on RGS board) or Fidelity are looking to add here


4

Update 3/4/13

• L3M comparable salon sales decline of -1.9% YoY (vs. -3.1% last quarter) and

investment in higher stylist hours behind LTM Adj. EBITDA drop of $25m to $155-

$160m (margin drop from over 9.5% to roughly 8%)

• Results in implied EV to LTM Adj. EBITDA multiple of 5.5x


Current share price $17.91 LTM NA salon revenue 1,938

Common shares outstanding 56.6 Consolidated LTM adj. EBITDA 165

Shares underlying convertible senior notes 11.2 Less: International salon LTM adj. EBITDA 7

Shares underlying options 0.0 Adj. EBITDA 158

Fully diluted shares 67.8 Adj. EBITDA margin 8.1%

Market capitalization 1,215

Implied EV/EBITDA 5.5x

Add:

Senior term notes 94

Equipment and leasehold notes payable 12

Other notes payable 0

Convertible senior notes assumed converted @ $15.35 172.5

Less:

Cash 218

Enterprise value 1,102

Less:

Hair Club for Men value Sold July 2012 156


Empire Education Group Fix / for sale 47



5

Update 3/4/13

• If investment in stylist hours does not drive traffic and L3M Adj. EBITDA margin of

6.1% were forward run-rate, back-of-envelope EBITDA is roughly $120m giving

Restructured Regis a current implied EV/EBITDA multiple of 7.0x-7.5x

• If $120m were new run-rate, current 5.5x LTM multiple would result in share price

of ~$15, implying downside of 20%

Restructured Regis EV/EBITDA multiple assuming lower future EBITDA

LTM NA salon revenue 1,938

L3M adj. EBITDA margin 6.1%

Implied run-rate EBITDA 119


Implied EV/EBITDA multiple 7.3x

Downside potential

LTM adjusted EBITDA multiple 5.5x

Implied run-rate EBITDA 119

Future enterprise value 652

Implied future market cap 1,003

Fully diluted shares 68

Implied future share price $14.78

Current share price $17.91

Downside -17%


6

Update 3/4/13

• While continued comp store sales declines are a risk, the follow-the-leader-style

implementation of value-priced salon best practices should lead to stabilized sales

and profits (though mall-based salon business warrants further attention given

lagging SSS growth performance in recent quarter)

• Assuming the turnaround occurs, potential stock price upside of 30%-90% (see

Slide 12 for EBITDA growth assumption rationale)

Valuation

Run-rate EBITDA 158

Add: growth potential 60 90

Pro-forma EBITDA 218 248

5.5x 5.5x 6.0x 8.0x

Restructured Regis enterprise value 1,192 1,357 1,307 1,983

Add:

Hair Club for Men value 156 156 156 156

International salons (UK) 35 35 35 35

Empire Education Group 47 47 47 47

Total enterprise value 1,430 1,594 1,545 2,221

Less: Net debt (assume conversion of conv. sr. notes) (113) (113) (113) (113)

Equity value 1,543 1,708 1,658 2,334

Fully diluted shares 67.8 67.8 67.8 67.8

Implied share price $22.75 $25.17 $24.44 $34.40

Current share price $17.91 $17.91 $17.91 $17.91

Return potential 27% 41% 36% 92%

Current multiple Normalized multiple range

Buy Regis Corp (RGS) common stock

Doug Bennett

October 5, 2012


8

Thesis

• Regis Corporation, an owner, operator and franchisor of hair salons, is in the early

stages of an activist-led restructuring that will likely improve EBITDA in the core

North American salons business by 40%-75%

• The potential upside in EBITDA and accompanying expansion of the current 4.8x

multiple to a more appropriate growth multiple implies 30%-100%+ upside in Regis

common stock (RGS), while downside risk would likely require multiple contraction

• The favorable upside potential, low likelihood of EBITDA decline from the current

trough level and low financial risk suggests RGS is an attractive long position for a

concentrated portfolio


9

Background

• 8/16/11: Activist investment firm Starboard Value sends letter to Regis board

outlining fundamental reasons for stock underperformance, announces intention to

nominate 3 directors at FY2011 annual meeting• http://www.sec.gov/Archives/edgar/data/716643/000092189511001799/0000921895-11-001799-index.htm

• For more background on Starboard Value, see Appendix I

• 10/12/11: Starboard files a more detailed presentation outlining Regis’ problems

and proposed solutions• Regis had among the highest gross margin in specialty retail but the lowest EBIT margin

• Company plagued by bad investment and financing decisions and an entrenched, richly

paid management and board

• Starboard outlined plan to divest non-core assets, drive same-store sales through

adoption of salon industry best practices and restructure the business to reduce

overheard/improve scalability• http://www.sec.gov/Archives/edgar/data/716643/000092189511001953/dfan14a106297096_10122011.htm

• 10/27/11: Starboard wins proxy contest and nominees are elected to the board• http://www.sec.gov/Archives/edgar/data/716643/000110465911060172/0001104659-11-060172-index.htm (note

negative “Say-on-pay” voting results)

• 10/27/11 - Present: Old management out, new CEO in, 2 of 4 non-core businesses

sold, field teams restructured and salon management best practices are being

implemented

http://www.sec.gov/Archives/edgar/data/716643/000092189511001799/0000921895-11-001799-index.htm

http://www.sec.gov/Archives/edgar/data/716643/000092189511001953/dfan14a106297096_10122011.htm

http://www.sec.gov/Archives/edgar/data/716643/000110465911060172/0001104659-11-060172-index.htm


10

Current valuation

• Excluding the value of non-core businesses sold or slated for sale, the market

implies a ~$880m value for the core, “Restructured Regis” enterprise, or roughly

4.8x LTM EBITDA of ~$185m


Current share price $18.38 LTM revenue 1,981

LTM reported EBIT 165

Common shares outstanding 57.4

Shares underlying convertible senior notes 11.2 Add:

Shares underlying options 0.0 Reported unallocated corp. operating expenses (173)

Fully diluted shares 68.6 Regis salons impairment charge 68

Market capitalization 1,262 Accelerated POS system depreciation 16

Senior management restructuring and severance 10

Add: Professional fees 5

Senior term notes 111 Field restructure and other 3

Equipment and leasehold notes payable 15 Deferred compensation 2

Other notes payable 0 Self-insurance reserve adjustments 1

Convertible senior notes assumed converted @ $15.35 172.5 Pure Beauty note receivable (recovery) reserve (1)

Less: Legal settlements (1)

Cash 112 Adjusted EBIT 95

Enterprise value 1,276 Adj. operating margin 4.8%

Less: Add: estimated NA salon D&A 89

Provalliance JV value Sold May 2012 104 Adjusted EBITDA 184

Hair Club for Men value Sold July 2012 164 Adj. EBITDA margin 9.3%


Empire Education Group For sale 95 Implied EV/EBITDA 4.8x



11

Core North American salon operations

• Unit-level EBITDA (excluding unallocated corporate overhead) has fallen as a

result of same store sales declines, primarily due to declining guest counts, in

addition to an inefficient operating structure

North American salons revenue growth factors 2006 2007 2008 2009 2010 2011 2012

Revenue:

Regis 481.8 498.6 514.2 475.0 438.0 434.2 414.8

MasterCuts 174.7 174.3 176.0 170.3 166.8 165.7 159.6

Trade Secrets 262.9 NA NA NA NA NA NA

SmartStyle 413.9 462.3 507.3 529.8 533.1 531.1 514.1

SuperCuts 703.3 287.4 305.1 310.9 314.7 321.9 343.8

Promenade NA 489.6 581.5 631.7 608.0 577.0 548.9

Total revenue 2,036.5 1,912.2 2,084.2 2,117.7 2,060.6 2,029.9 1,981.1

Reported EBIT 256.6 259.4 285.9 275.6 219.9 166.7 165.4

EBIT margin 12.6% 13.6% 13.7% 13.0% 10.7% 8.2% 8.3%

Add: non-cash / one-time expenses 0.0 0.0 6.1 0.0 35.3 74.1 67.7

Adj. EBIT 256.6 259.4 292.0 275.6 255.2 240.8 233.1

Adj. EBIT margin 12.6% 13.6% 14.0% 13.0% 12.4% 11.9% 11.8%

Add: Est. D&A 97.1 89.8 95.2 100.8 95.0 91.7 88.7

Est. N.A. Salon EBITDA 353.7 349.2 387.1 376.4 350.2 332.5 321.8

EBITDA margin 17.4% 18.3% 18.6% 17.8% 17.0% 16.4% 16.2%


12

Restructuring initiatives

• Regis’ activist-controlled board completed an extensive study of Regis’ business

shortly after taking control of the company

• Analyzed customer transactions

• Spoke with customers about in-salon experience

• Interviewed employees and franchise owners

• Researched industry best practices to understand how competition was

succeeding

• Key deficiencies in the in-salon guest experience were identified in the study

• Customers were leaving primarily because their expectations were not met in

terms of service and salon experience

• Competitors were more consistently meeting these expectations

• Certain Regis brands were competing with each other


13

Restructuring initiatives – sales growth

• Improve quality of stylist service / improve stylist retention• Stylist compensation will now include a guest retention component

• Repeat guests will generate compensation for original stylist

• Salon/field managers will focus on supporting and mentoring stylists; “distracting” HR

and local-level marketing responsibilities will be transferred to specialists• Many salon and field managers usually begin as outstanding stylists – this initiative will allow

them to spend more time in the salon, focusing on what they do best

• Additional corporate operations and HR staff will be funded by increasing the span of control of

regional managers and district leaders, who will now be eligible for a performance-based bonus

(stakeholder incentive misalignment a major problem pre-restructuring)

• Updated, third-party POS system fully implemented by end of CY2012• Enhanced customer demographic info

• Will allow customers to remotely monitor wait times at local Regis salons with a

smartphone app (they are copying successful first-mover Great Clips)

• First CRM program implemented• Will allow analysis of customer lifetime value and retention

• Management will use customer data to make more informed marketing decisions (i.e.

type and level of promotion required to drive positive NPV customer trials)

• Prior to activists taking control, the company did not capture customer data


14


• Management states in the recent 10K: “Although we have generally been

experiencing negative same-store sales we believe our strategy of focusing on the

in-salon guest experience will improve same-store sales.”

• Same-store sales will likely grow as salon chain management best practices are

implemented• Company-owned SuperCuts and the concepts under the Promenade umbrella materially

underperform franchised stores • SuperCuts average salon sales (franchised - $340k ; corporate - $270k)

• Promenade avg. salon sales (franchised - $280k ; corporate - $245k)

• Combined, these concepts account for 45% of Restructured Regis revenue

• Company-owned salons in the $17-$22 haircut segment (79% of Restructured Regis

revenue) materially underperform stores of other salon chains• Great Clips and Sports Clips do $306k and $318k avg. sales per salon vs. Regis’ $230k-$280k

North American salons revenue growth factors 2006 2007 2008 2009 2010 2011 2012

Acquisitions (previous twelve months) 4.4% 4.5% 4.6% 3.7% 0.8% 1.2% 0.7%

Same-store sales 1.1% 0.9% 1.8% -2.9% -3.3% -1.8% -3.2%

New stores 3.3% 2.6% 2.4% 2.0% 0.8% 0.6% 1.3%

Foreign currency 0.4% 0.2% 0.8% -0.9% 0.5% 0.5% 0.0%

Franchise revenues -0.1% 0.0% 0.1% -0.1% 0.0% 0.0% 0.0%

Closed salons -0.4% -0.4% -0.4% -0.5% -0.4% -1.4% -2.3%

Other -1.1% -0.6% 1.1%

Total 8.7% 7.8% 9.3% 1.3% -2.7% -1.5% -2.4%


15


• Regis management has indicated EBITDA rises around $9 million for each 1%

increase in same store sales

• Company-owned SuperCuts and Promenade concepts are underperforming

franchises and competitors’ concepts by 15%-25% on a sales per salon basis

• If comparable stores sales were to rise by 15% in this segment representing 45% of

Restructured Regis revenue, EBITDA would rise by ~$60m

• The other concepts, especially those in the $17-$22 haircut segment representing

79% of Restructured Regis revenue, should also see some lift in sales from

implementation of salon management best practices

• If the entire company experiences just a 10% comp lift over the next few years,

current run-rate EBITDA would rise by ~$90m, roughly 50% higher than the current

$180m-$190m run-rate• Despite a 10% comp lift, Regis salon sales would still be below those of its franchisee-

and competitor-owned salons


16

Restructuring initiatives – expense reduction

• Expense reductions implemented in late FY2012 will drive $25m in net expense

reductions in the next 12 months• Management indicates more expense cuts are likely this year, one analyst mentioned the

company guiding an additional $10m in annual savings

• Implies a pro-forma operating margin of 6.0%-6.5%, which appears rational relative to

most indirect comps identified in the RGS proxy

• The company will reduce 50+ brands with individual field teams to 10-15 brands

operating under 4 standard operating models• Consistent, quality service at a competitive price drives sales, not the salon name

• Will increase marketing efficiency

• New model is more standardized and scalable than the piecemeal structure it replaces

Pro-forma EBIT / EBITDA margins Comparable company Enterprise Value ($m) LTM EBIT margin LTM EBITDA margin

RADIOSHACK CORP 440 0.6% 5.4%

LTM operational EBIT 95 JACK IN THE BOX INC 1,715 5.1% 10.9%

Add: expense cuts 25 35 Restructured Regis (pro-forma) 1,272 6.6% 11.0%

Run-rate EBIT (assuming flat sales) 120 130 GAMESTOP CORP-CLASS A 2,679 6.8% 8.1%

% of revenue 6.1% 6.6% PAPA JOHN'S INTL INC 1,256 7.3% 9.8%

CRACKER BARREL OLD COUNTRY 1,937 7.4% 9.7%

Add: D&A 89 89 BRINKER INTERNATIONAL INC 3,169 8.3% 12.6%

Run-rate EBITDA 209 219 PETSMART INC 7,730 8.8% 12.1%

% of revenue 10.5% 11.0% FOOT LOCKER INC 4,846 9.0% 9.7%

ADVANCE AUTO PARTS INC 5,171 11.0% 13.6%

STARBUCKS CORP 36,139 13.0% 18.0%

SERVICE CORP INTERNATIONAL 4,774 16.4% 23.8%

AUTOZONE INC 17,360 18.9% 21.4%

H&R BLOCK INC 4,687 21.4% 22.9%

DINEEQUITY INC 2,669 23.9% 27.6%

Median 3,928 8.9% 12.4%

Source: Bloomberg


17

Implications for run-rate EBITDA

• In sum, run-rate EBITDA (assuming no new salons) could rise $85m-$125m over

the next couple of years to $270m-$310m

• Assuming flat sales, expense cuts will yield Restructured Regis $25m-$35m in additional

EBITDA

• EBITDA could rise another $60m-$90m assuming same-store sales rise as Regis copies

aspects of its better run competitors’ business models

• Cumulative EBITDA growth of 40%-75%


18

Potential multiple expansion

• If EBITDA stabilizes and begins growing, the current depressed EV/EBITDA

multiple of 4.8x is likely to expand to the 6.0x-8.0x range of a steady, modestly

growing specialty retailer • Only secularly impaired Gamestop and Radioshack trade at a cheaper valuation

• Value-priced salons operating according to industry best practices exhibit little risk of

secular decline

• Competitive advantages vs. predominantly mom-and-pop competitors suggest growth

potential (See Appendix II)

• Activist investors holding concentrated positions control the board and are

incentivized to sell the company once stabilized• One easy exit captures fair trading value plus a control premium

• An ideal private equity candidate if stabilized, a cash cow with low capital requirements

Comparable company Enterprise Value ($m) EV/EBITDA LTM EV/Sales LTM

GAMESTOP CORP-CLASS A 2,679 3.4x 0.3x

RADIOSHACK CORP 440 4.0x 0.1x

Restructured Regis (pro-forma) 879 4.8x 0.4x

ADVANCE AUTO PARTS INC 5,171 6.0x 0.8x

FOOT LOCKER INC 4,846 7.6x 0.8x

CRACKER BARREL OLD COUNTRY 1,937 7.6x 0.8x

JACK IN THE BOX INC 1,715 8.3x 0.8x

SERVICE CORP INTERNATIONAL 4,774 8.3x 2.0x

BRINKER INTERNATIONAL INC 3,169 8.7x 1.1x

AUTOZONE INC 17,360 9.4x 2.0x

DINEEQUITY INC 2,669 9.5x 2.7x

PETSMART INC 7,730 9.7x 1.2x

PAPA JOHN'S INTL INC 1,256 10.1x 1.0x

STARBUCKS CORP 36,139 16.0x 2.8x

H&R BLOCK INC 4,687 1.7x

Median 3,928 8.3x 1.1x

Source: Bloomberg


19

Valuation and return potential

• At the current depressed 4.8x EV/EBITDA multiple for Restructured Regis, EBITDA

growth would result in a 30%-50% stock return over the next few years ($24-$27

per share range)

• At a valuation closer in line with its stable specialty retail peers, combined EBITDA

growth and multiple expansion could move the stock 50%-100%+ ($30-$40 per

share range)Valuation

LTM adj. EBITDA 184

Add: expense cuts 25 35

Run-rate EBITDA 209 219

Add: growth potential 60 90

Pro-forma EBITDA 269 309

4.8x 4.8x 6.0x 8.0x

Restructured Regis enterprise value 1,285 1,476 1,613 2,471

Add:

Provalliance JV value 104 104 104 104

Hair Club for Men value 164 164 164 164

International salons (UK) 35 35 35 35

Empire Education Group 95 95 95 95

Total enterprise value 1,683 1,874 2,011 2,868

Less: Net debt (assume conversion of conv. sr. notes) 15 15 15 15

Equity value 1,668 1,859 1,996 2,854

Fully diluted shares 68.6 68.6 68.6 68.6

Implied share price $24.30 $27.08 $29.08 $41.57

Current share price $18.38 $18.38 $18.38 $18.38

Return potential 32% 47% 58% 126%

Current multiple Normalized multiple range


20

Valuation and return potential

• Around 10% of newly hired CEO Daniel Hanrahan’s first-year compensation is

20,000 shares of restricted stock which vest only if the stock has traded above $35

per share for 20 consecutive trading days sometime in the next 5 years• A potential clue as to where the Board thinks the stock can realistically trade

• Recently appointed board member’s investment firm, Birch Run Capital, increased

position $10m to $117m around $18 per share in the three trading days after the

10-K was released on 8/29/12• Purchases were made immediately after an earnings quiet period, and after the director

had examined the company’s turnaround progress as a board member since 8/1/12

• The fund’s RGS position accounted for 50% of Birch Run’s long equity portfolio prior to

the recent open market purchases (credit and other AUM unknown)

• Work sample suggests a Birch Run is a quality firm:

(http://kerrisdalecap.com/commentary/?page_id=107&pid=268)

New CEO Daniel Hanrahan's first-year compensation $ value % of total

Base salary 850,000 12.4%

125% bonus 1,062,500 15.4%

Long-term equity incentive program 2,250,000 32.7%

Special equity award 2,016,500 29.3%

20,000 restricted shares if RGS stock hits $35 700,000 10.2%

Total 6,879,000 100%

http://kerrisdalecap.com/commentary/?page_id=107&pid=268


21

Appendix I: Starboard Value

• Recently spun out of Ramius Capital ($9b+ AUM) – Cowen Group (COWN) subsid.• Good historical performance

• Spun out of Cowen Group due to potential conflict of interest (investment banking,

activist investing under same roof) – Cowen maintains equity stake

• http://www.starboardvalue.com/

http://www.starboardvalue.com/


22

Appendix II: Competitive advantages and growth opp.

• Regis is the largest salon chain operator in the US, but it and its franchisees only

operate 9,300 of the 94,000 salon and barber shops with paid employees in the US• Regis’ LTM sales of $2 billion represent roughly 9% of this $22 billion annual market

• As the largest operator, Regis still holds under 5% market share in the $41 billion

total salon and barber shop market, which includes 900,000 additional non-

employer based salon establishments (i.e. individual owner/operators, chair

lessors, chair lessees, at-home hair stylists [$19 billion in collective sales])

• If new management can successfully realign incentives so Regis’ “boxes”

consistently deliver convenient salon services at a competitive price, Regis can

resume growth• Regis’ scale allows it to offer employees upward mobility and better benefits relative to

smaller competitors

• Advantage over mom-and-pop competitors in retailing hair products• Scale allows discounted purchases vs. mom-and-pop (i.e. $10 MSRP shampoo is sourced at

$3 per bottle vs. $5 for mom-and-pop)

• Product retailing is 10%-35% of total salon revenue across Regis concepts

• Scale allows the company to grow and respond to threats early through acquisition• Salons and small groups of salons typically sell for 3.0x-5.0x EBITDA

• Competitor Great Clips has grown comparable store sales for 30 straight quarters and

brisk new salon growth continues – a better run Regis could do the same