Q2 2023 Regis Corp Earnings Call

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[music] good morning, and thank you for joining the <unk> second quarter 2023 earnings release Conference call I'm. Your host is Mccain Vice President corporate controller.

All participants are in a listen only mode.

The prepared remarks by our President and Chief Executive Officer, Matthew Doctor and.

And executive Vice President and Chief Financial Officer, Kristin Zephyr are accompanied by side to help participants all along.

After the prepared remarks, we will have time for questions. Please.

Please use the chat feature or raise your hand feature to ask a question.

Please note this conference is being recorded.

I would like to remind everyone that the language on forward looking statements included in our earnings release and.

And 8-K filing.

Also apply to our comments made on the call today.

These documents along with our presentation today can be found on our website at Www <unk> Corp, Dot Com Fourth-class Investor Relations.

Along with any reconciliation of any non-GAAP financial measures mentioned on today's call with their corresponding GAAP measures.

Today's slides are located in the investor presentation, and supplemental financials section of our Investor site.

With that I will now turn the call over to Matt.

Thank you Bruce and good morning, everyone and thank you for your interest in regions for <unk>.

This call I will highlight our second quarter fiscal 2023 results and reiterate our strategy and the priorities we have for the business as we enter the second half of our fiscal 2023 year.

I am pleased to report continued business progress that resulted in a strong quarter for readers and our best start to a fiscal year in quite some time.

We have built upon our positive start to the fiscal year by delivering further sales and EBITDA growth with Q2 2023, adjusted EBITDA of $8 million more than double our adjusted EBITDA of $4 million that we reported last quarter.

These results come just 18 months after we reported an adjusted EBITDA loss of $77 million for our full fiscal year 2021.

In the last two quarters, we have reported adjusted EBITDA of $12 million, which is a testament to the progress made by the Regis team and our franchisees it.

It is worth mentioning again as I have on previous calls and I am proud of the progress we are continuing to make in a relatively short period of time.

Coming out of fiscal 2021, we utilized 2022, a year to stabilize the readers to the one.

Ending down of our legacy businesses streamlining our G&A selling our technology platform and amending and extending our credit agreement while simultaneously aligning on a go forward strategy with our franchisees to drive our business forward.

All of which required a tremendous amount of work and execution.

And that work continues to come through in our results.

Not only having turned the corner on profitability from an adjusted EBITDA perspective.

But also accelerating.

We will continue to focus and execute against our strategic initiatives of stylist retention and recruitment.

Customer attention and traffic driving initiatives and the rollout of our technology partners and notice Salon management platform in an effort to grow top line sales and franchisee profitability, which will in turn drive reagent sales and profitability.

While we have come a long way, we still have a ways to go and work to be done but.

But I continue to remain excited and encouraged by the strides we have been making in our business and the future of our scaled fully franchise platform.

I will now speak to some of the highlights of our second quarter and year to date results.

Person will be diving deeper into the results in her section I think it is important to note the details and nuances Kristian will mention in there is there are a number of onetime items that had an impact on the quarter.

That being said the overall theme of progress and strong results continues to hold regardless of the onetime impacts.

For the quarter same store sales rose four 5% versus the prior year's second quarter.

Adjusted Q2, 'twenty three EBITDA on a consolidated basis was $8 million compared to $3 million in the prior year's quarter, a $5 million improvement adjusted.

Adjusted EBITDA on a six months year to date basis improved by $14 million year over year, and $12 million versus a loss of $2 million a year ago.

Our franchise segment EBITDA was $8 million for the quarter, increasing $2 million as compared to the second quarter of fiscal 2022.

On a year to date basis, our franchise segment EBITDA is up over $10 million versus a year ago at $12 5 million year to date versus $2 million during the prior year period.

We reported our second quarter in a row of positive operating income of $1 million versus an operating loss of $5 million in Q2 fiscal 'twenty to.

Operating income on a year to date basis has improved by almost $9 million versus the prior year at $3 million for the six months ended December 31, 2022 versus a loss of $5 million during the prior year period.

And finally from a cash perspective, we continue to make strong progress in decreasing our cash use as we've come a long way from the cash use over the past two to three years and are getting closer to cash flow breakeven.

Our liquidity position and capital structure remain healthy as we ended the quarter with total liquidity of close to $44 million, providing us ample runway to continue investing in and improving the business.

Turning now to our business initiatives.

Much of what I'll be talking about will be a reiteration of the strategies and priorities I have mentioned on previous calls as they remain the same and they will continue to remain the same for the foreseeable future.

All of these items, we view as foundational to our business and our plays for the long term.

And given the velocity of our business with customer visitation cycles generally between one to two months combined with how important increasing our franchisees stylists workforce is these are not factors that will change overnight.

But rather required the repeated investment of time and effort in addition to testing and learning.

We are confident that our areas of focus are the right ones and we will continue to bring the right balance of urgency discipline and patience as we execute on our business initiatives to move the needle on sales and franchisee profitability.

Now regarding our readers specific business items, our team continues to do a great job of tightly managing G&A and.

In winding down our company owned salons. These actions remain instrumental in continuing to provide us the runway needed to drive the turnaround and positioned for Regis for growth as we implement our sales driving initiatives.

From a G&A perspective over the last several quarters, we provided revised guidance to a range of go forward G&A and during this quarter, we have continued to make improvements.

We are pleased with our efforts here and Christian will be providing another update on our revised range. During this call.

I also want to make it clear.

And that while we have been optimizing G&A to match our current business model. It is not affecting the manner in which we support our business and our franchisees in fact.

We're actually increasing our field level support and the programs are franchisees have access to and we'll continue to do so as we are on the path of being a strong franchise or.

In regards to our company owned segment, we ended the quarter with 75 company owned salons, while our company owned segment was positive for the quarter on an EBITDA basis, largely due to a onetime COVID-19 relief payment that person will touch on this is an area that continues to provide a drag on our profitability.

And due to the hard work of the team. We now have clear line of sight over the next 12 months to wind down another 55 to 60 salons with and with those rolling off we will have mitigated the majority of the negative contribution. These salons have on our business by this time next year.

Now as we move ahead, we will continue to monitor our G&A and our company owned portfolio very closely.

Moving on to our salon level initiatives of technology, stylist retention and recruitment and customer marketing.

On the technology side, our key initiatives, you're remains consolidating our system onto a singular point of sale software system.

Through the sale of our open Salon software platform in June of 2022, we have partnered with Sidoti has our main technology partner.

And as of December 31, 2022, <unk> had over 500 salons actively using the product.

And many more signed up to migrate.

Currently the main priority for us and as I noted is to engage with and stay close with our migrated user base to ensure the experience and functionality meets the unique needs of our brands, our franchisees and stylists.

We are listening intently to the feedback and we're deploying the requisite resources to address any issues raised in short order with the goal of accelerating sign ups in migration when our franchisees' needs have been met.

We believe the product is close to being properly tailored for all of our brands and we look forward to tapping into the many benefits there is annuity platform will provide.

We believe having an annuity rollout across our franchisee base will allow us to better engage with customers and connect deeper digital channels. We will also be able to drive the many initiatives, we have around lifecycle marketing and loyalty.

Which should further unlock the benefits of our size and scale.

As well as being and bring greater uniformity to our brand promotions zanotti.

As I noted, we will also provide us and our franchisees and the ability to make it even more personal approach to getting to know our customers preferences and ultimately provide a better service experience across our salons. In addition to increased stylist productivity.

On stylist retention and recruitment I've spoken on previous calls about the labor challenges, which has been putting pressure on our sales recovery.

We are constantly thinking through with our franchisees, how they can best attract hire train and retain stylists.

We are working on refining each of our brand's unique employer value propositions to ensure we have impactful reasons why stylus should join one of our regional brands not only as an important that we have clear messages, but another key initiatives will be ensuring that the message gets out to meet the stylus where they are.

This includes us and our franchisees, taking time to cultivate and build relationships in beauty schools as well as being active on social and digital channels.

In addition, we have spoken at length about our increased investment in education as a tool to attract and retain given the importance of ongoing education stylus.

I am very pleased that the foundation, we have been building through our various programs that include our in house artistic directors and field based technical trainers.

Want to build the largest and most impactful educational platform in the industry.

And we have grown our collective training team significantly over the course of the past year to over 1000 trainers across our system versus less than 150 at this time a year ago.

Given the recent exponential growth we have only scratched the surface regarding the impact. This team can have on elevating the technique of stylists driving the latest trends and ensuring customers are receiving the quality services that they are seeking.

We have ramped up the number of insulin prices across all of our brands as well as the digital training support we are providing to our trainers and stylists.

We believe this will go a long way and keeping Silas engaged in as a critical touch point that we uniquely provide.

In addition, we're about to launch the lung leader and manager training this month to build soft skills on the non technical side.

And looking at data from the past few months early findings suggest that those salons that have a dedicated technical trainer are outperforming the rest of the system on a sales basis.

We look forward to not only rolling this out further but also developing programs to fully optimize the use of this valuable team and resource.

We have also brought back in person enhanced Education award trips in a big way.

With our most recent one having just taken place in Las Vegas for the Supercuts brand in early January .

The entire leadership team along with many other Regis employees and franchisees attended this event that hosted around 850 trainers managers and stylists.

These events like this are differentiators and will be key to rewarding top performers to drive further engagement.

And retaining our franchisees' top talent.

These events are also critical to enhancing brand culture, and providing stylists the sense that they are part of the community versus an individual salon.

Taken together, we believe all of these components will truly differentiate our brands and set us apart as a destination to work for both stylists that are looking to start their careers as well as those with experience.

On marketing we.

We continue to prioritize retention and building further loyalty to our brands.

Previously mentioned the shift in media spend which we are continuing to make to optimize those channels, providing the highest ROI.

We have test campaigns out in market with various lifecycle and CRM messaging and we will seek to expand on the ones that are driving the most traffic.

Our loyalty programs are getting closer to being piloted and.

And refreshed brand campaigns are in the works.

We are finding the right balance between performance based traffic driving initiatives and overall brand strategy. It is important that neither one of these get lost.

The goal of all of this is to create a stronger relationship through more communication with our customers and I am encouraged as we test and learn new tactics utilizing the rich data, we have and will continue to gather.

And I look forward to gaining further insights and landing on high impact programs to drive traffic and awareness to our salons.

I will wrap up our initiatives here and while this was not exhaustive of what we were doing I wanted to provide you. Some examples insights into the work streams, we have in place and how they can impact our business across the entire system.

As we look forward to the third quarter and beyond.

I want to ensure that I set the proper expectations of what our results may look like and.

And I don't want to give the impression that our Q2 results are the new benchmark for a quarterly run rate from an EBITDA perspective at least not at this stage of our turnaround given that there were some one time items and timing that contributed to the quarter.

That said I want to be very clear, but our results. Thus far have been in line with where we are expecting them to be and then nothing has been a surprise to us.

Staying with the theme of expectations and no surprises given the timing of certain expenses such as the Supercuts education event that took place in January .

As well as the seasonality of sales we expect the next few quarters to come in below Q1, 'twenty three adjusted EBITDA, which still represents continued year over year improvement.

I want to not only gives you that visibility, but also let you know in advance that from our perspective, a dip over the next few quarters does not signal a step back, but rather what is fully expected and planned for given the timing of investments that we will be making.

Taken in totality with our first two fiscal 2023 quarters. We are on track to deliver significant EBITDA growth over the course of fiscal 2023 versus our prior years.

I would like to close by reiterating the excitement for the future of Regis.

We have all of the elements in place to continue building on the momentum we are gaining.

We have strong conviction around the industry that we are in our positioning within the industry.

Our revamped and more streamlined business model.

The stabilization, we have achieved for our platform.

The positive results we are delivering.

And the strategy, we have in place to address the challenges our business faces in order to drive sales and franchisee profitability.

I am proud of all of our team members, our franchise owners and business partners for their resilience passion and dedication to Regis.

This is an exciting time for us and I want to again, thank the entire <unk> system for their contribution to our results and thank you for your continued interest in our company.

With that I will now turn the call over to Kersten to review the financials in more detail.

Person.

Thanks, Matt and good morning, we're pleased to speak with you to share our second quarter and first half fiscal 2023 performance.

Marked our best start to a fiscal year in five years when measured by GAAP operating income and demonstrates the future regions as an asset light franchise owner.

Our operating income improvement is driven by our focus on controlling G&A.

Wind down of last generating company owned salons, and our distribution centers and to a lesser extent the benefit of some one time items, which were partially offset by one time costs.

Reviewing the second quarter in more detail beginning with the income statement on a GAAP basis total second quarter revenues were $60 million and declined $9 million from the prior year.

This revenue decline was expected and relates primarily to a reduction in franchise rental income and the wind down of our company owned salons.

Franchise rental income flows through both revenue and expense and therefore has no impact on profitability. We believe a better reflection of our revenue performance is system wide same store sales, which grew four 5% in the quarter.

We continue to believe our initiatives to drive stylist hours in customer traffic will support continued improvement in system wide same store sales.

As I mentioned, we posted another quarter of GAAP operating profit and a strong start to the year. The increase in GAAP operating profit was driven by the wind down of loss generating company owned salons, and our continued focus on managing G&A.

Additionally, I would like to call your attention to one time expenses and benefits and our GAAP operating income for the quarter.

On the expense side, we had a $2 6 million depreciation charge driven by the consolidation of our office space and a $1 $2 million inventory reserve charge.

As it relates to the benefits, we had positive insurance adjustments, which lowered G&A in the quarter by $600000.

Now, let's turn to our adjusted results, which eliminates the noise in the reported results.

On an adjusted basis second quarter consolidated adjusted EBITDA was $8 million compared to $3 million in the prior year's quarter.

The $5 million improvement was driven by our lower G&A, which included a $600000 positive actuarial insurance adjustment the wind down of loss generating company owned salons, and a $1 1 million grant from the state of North Carolina related to COVID-19 relief.

Our core franchise business achieved adjusted EBITDA of $8 million in the quarter, a $2 million improvement compared to $6 million in the prior year quarter.

On an adjusted EBITDA basis, our company owned segment was just about breakeven even for the quarter and improved $3 million from the second quarter last year.

The improvement is driven by the $1 $1 million grant from the state of North Carolina related to COVID-19 relief and having fewer last generating company owned stores in the current period as they are closing stores at the lease and negotiating early buyouts where appropriate.

For the first half of fiscal 2023 revenues were $122 million compared to $146 million in the first half of fiscal year 2022.

Similar to the second quarter revenue decline. This decline was expected and relates primarily to a reduction in franchise rental income and the wind down of our corporate on salons, as well or as well as lower product sales to franchisees.

Adjusted EBITDA for the first half of the year was $12 million or $14 million improvement compared to a $2 million.

Loss in the first half of fiscal year 2022.

Adjusted EBITDA improved primarily due to our lower G&A, the wind down of loss generating corporate <unk> lines, and a $1 1 million grant from the state of North Carolina.

Breaking this down further adjusted G&A was $25 million for the first half of the year.

This is lower than our expected run rate in the second half of the year due to our investment spend on training recruiting and retention, which will increase as we accelerate these initiatives in the second half of the year.

As Matt mentioned, we continue to optimize our G&A spend and last quarter, we revised our expected normalized G&A spend to 57% to $60 million.

From $60 million to $63 million.

Even with the planned strategic spend in the back half of fiscal year 2023.

We are now reducing our G&A outlook further and expect G&A to normalize between 54 and $57 million annually.

Fiscal 'twenty three are trending towards the low end of that range.

Yes.

Turning to liquidity.

As of December 31, we had $44 million of liquidity, including 30 for $34 million of available revolver capacity and $9 million of cash in the first half of the year, we used $7 million of cash from operations of which 5 million was used in Q1 and $2 million was used in Q2.

On a year over year basis cash used in the first half of 2023 improved $17 million from the prior year.

The $2 million cash used in the second quarter includes $2 5 million of deferred social security payments and another 500000 payments to complete our obligations.

<unk> to our transition services agreement with our farm our point of sale provider.

These cash uses were offset by the $1 billion $1 $1 million of cash received as I mentioned earlier.

Adjusting for these cash uses second quarter cash using operations was flat.

We expect to use more cash in the back half of fiscal 2023, as we further invest in training recruitment and retention with.

With the sale of OSP, our capital expenditures have decreased by approximately $3 million. This year, which is in addition to the cash saved on G&A.

Given our working capital and modest capital expenditure requirements. We believe we have ample liquidity.

This concludes my prepared remarks I'd like to thank you again for your continued support and interest in Regis with that I will turn it back to Bill who will lead us through the Q&A.

Thank you Kirsten please remember to use the chat feature or raise your hand feature Jeff Good question.

The first question we have is through the chat Krishna. This is for you. Please give an update on the NYSE compliance.

Great question. We are currently in compliance with the New York Stock exchange stock price requirement as well as the market cap requirement. We're just awaiting the final compliance letter from the exchange.

Thank you.

Alright on the line, we have Eric Peter from small cap consumer research Eric Please remember to mute your line.

Good morning can you hear me, yes, yes, yes.

Congratulations on a solid Q2, thanks, Eric you guys made a lot of progress.

You see the potential to start adding more more salons to the franchise mix. Obviously, you've spent a lot of time cleaning the base up when do you look at it going forward to potential start adding to the mix.

Hey, Eric Thanks, Matt and good morning, and thanks for the question I think you had mentioned a lot of time cleaning the base up I think.

From our standpoint, we're just continuing on focus on executing on the visitors to the business and all the initiatives. We just mentioned.

Really where it starts and ends right now on just continuing to move this business forward continuing to bring stylus back into the equation continuing to drive our customer traffic and Thats really where the conversation starts getting a lot easier amongst franchisees and even folks who are on the outside who have shown interest in growing but our focus.

Right now is ensuring that the franchisee profitability is optimized to ensure we have the right business case that is ongoing and I see that to probably be the case over call. It. The next year, so really going to really continue to focus on the turnaround, which again will unlock those conversations make it easier for the franchisees who have expressed their interest.

We do have an interest from the outside but really just wanted to focus on the business model as much as possible right now and kind of as we mentioned on calls in the past along with that cleaning up is coming with some cleanup of the footprint I mentioned on the previous call I'll say it again right now what we're seeing is a bit of a cleanup of salons.

Underperforming salons, which has been a drain on resources and time and I think that is a benefit to the system as well. So as we continue with kind of winding down those that are underperforming we can start putting our focus back on.

The growth loans.

You talked about the talk obviously about the franchisees you had this event last month in Las Vegas, but what was the feedback you are getting from the franchisees in terms of what they are looking to see.

Going forward, how they are feeling of what's going on in the world. Yes, no absolutely. It was a it was a fantastic events I can't speak to that enough and by everyone who is in conjunction with putting that on that came through a big collaboration with our franchisees actually.

The concept of the idea of that event came out of our regional road shows we did last year or we ask how can we better ensure that we're engaging and retaining our stylists rewarding top talent, ensuring that we have some more essence of the brand culture excitement, bringing that back amongst the stylist community and this is something that we.

We're aligned with them as being a key tool as part of that initiative. So it was awesome to see.

That was a conversation that happened.

Beginning middle of next year and for that to come to fruition around six months later after that and I haven't events were 850, plus stylist managers trainers franchisees vendors team was pretty incredible. So it was awesome event from that standpoint, stylus and managers left Super engaged we also had an owner track to your.

Point on we use it as an opportunity as a further touch base with them to get to the latest feedback on pay here's what's going on from a recruitment marketing perspective, what are your views on that here's what's going on from the latest brand campaign.

Revamps that we're going through we're showing some previews what are your views on that.

Here's the latest with Sanofi to give us some feedback on what youre seeing and what can we do to improve that platform. So really it was a time of a ton of constructive dialogue on the heels of engagement with them in an event that we came together to really put on in conjunction with the franchisees. So overall just a great sense of collaboration.

On what they.

Feedback on our key priorities, which are going to take into account. So it was very productive from that standpoint, and I think the approach of trying and making a more concerted effort to bring them in to those major decisions and the major thing is affecting our business are greatly appreciated even in the face of some as.

As we're looking to get the business back on track.

Thank you and when you step back.

We've gone through Covid, we've gone through now people coming back to work what are you seeing what are the franchisees seeing in terms of the customer how often theyre coming is this does it not only is this business with customers as sensor economic slowdown. This instance, how should we be thinking about the changes that have happened really in the customer base being affected in <unk>.

Flowing through into your business.

Yeah, no absolutely it's a good question.

Yes, we are seeing some stretching of visitation things are different.

I mentioned is if you want to ask of the diner is just different and.

So I would say regardless of that.

Factor there is still a ton of opportunity.

We excited is the fact that everything we've just talked about.

The momentum we're gaining the progress we're making there are largely coming without.

The effects of the strategic initiatives that we're talking about fully taking hold and what I mean by that.

The work has been done.

To this point on those to get us in a position to execute customer data cleanup foundational groundwork research talking with our franchisees piloting various messages testing and learning various channels.

Getting smarter every day on what's going on now so from my perspective, we haven't even scratched the surface regarding the impacts that could have on these yet are still moving forward. So given that I think the instrumentality of those initiatives can have is plenty of customers out there is plenty of opportunity for us to increase our relationship with our customers drive further.

Retention drive traffic and you kind of mentioned a little bit about the industry and I mentioned that as a highlight this as kind of the most subscription like model without being an official subscription due to the fact that health care is more of a need versus a want and people look to get their haircut and colored whatever have you and they prefer to do that with trained professionals. So regardless.

Of the Thai regardless of customer behavior, I think there is really a lot of space for us given that dynamic and I really like our positioning and prospects to capitalize that given our scale convenience value for money quality of service, our salon provided attractive price points, but I think this will be resilient through all economic cycles and the incremental <unk>.

Just can have regardless on the stretching out of cycles here Theres a lot of customers to go after attract keep and retain and build loyalty to our brands.

Its still pretty difficult to cut your hair online.

Yeah.

Absolutely true.

And then last question here I noticed that longer term, where do you want to be longer you've obviously made great progress in cash flow, where do you what are the longer term with that in terms of potential and our ratios are levels, how should we be thinking.

Obviously as I don't think there is a fiscal 'twenty three question, but how should we think of longer term in terms of where the right level of debt should be here.

Yeah, No. That's a good question and I think it comes back to kind of what I said earlier, what we're focused on just what's going to bring us back to growth, what's going to end up leading to debt Paydown is ultimately well. It's two things the first and foremost is continued execution on the business.

We look to increase our top line as we look to continue to drive profitability a lot of and generated cash flow a lot of that will go down to pay debt that is a big piece of the value equation here unlocking further value for stakeholders. So that is ultimately a place that we're looking to get through in the way that we get there.

Ultimately continuing on the path, we're on continuing to grow that top line and essentially be able to get in a position to start paying that down. The other piece that comes along with this as well that I don't want to lose sight of that may be a bit of a 23 is the payment stream that we could be getting.

From Zanotti as part of our earn outs from migration.

So that is something that will come in hopefully over the course of 'twenty three probably towards more towards the back half just a little bit of a color on how that works. So we received an upfront payment from Sidoti and that kind of covers off first.

X amount of salons and then after.

Number of salons migrate we start getting payments for the rest of incremental migration beyond call. It what that increment that first payment covered.

So as you start to see additional salons migrate over we will start to be able to get proceeds from that which will go directly towards debt paydown, so between that which it could be a 23 thing and the execution of our business, which to your point is a little bit longer term. Those are the things that will help us delever in terms of the.

Target, we're looking at our reach we haven't put that out there at this point, yet, but that's something we'll consider in the future.

Great. Good luck for the rest of the year.

Thanks Alastair.

Alright, and next we will go to Sydney Wagner from Jefferies. Please go ahead, Amit your line Sidney.

Hi are you guys able to hear me okay.

Yes, yes, yes, perfect well. Thank you for taking my question. So my first question was just around the labor market in stylist retention and recruitment where do you stylus count levels fall relative to where they were pre COVID-19 and then I'm just curious on any early reads or feedback you have from the stylist recruitment initiatives.

Sure. Thanks. This is Matt I appreciate the question, where do they fall versus pre Covid is pretty interesting I think we've talked about this that way it kind of matches up pretty much with kind of traffic declines that we're seeing so this is around 20% down from an hour's work perspective versus pre COVID-19.

And again that is something that recently has been fairly stable on any incremental <unk> of just increasing those hours works, even just one hour one five hour personal on per day could have some significant impact on our franchisees' profitability on topline.

So the various factors that have been moving this in a positive direction, where we see a lot of different things franchisees pay plans commission structure.

Salon culture access to training all of the things that we have here and we see which is why this is where we're putting so much of our focus in to one get the story out there.

To ensure our trader training leaders and managers are trained on the soft skills to provide a great culture. So we know how important managers are when we talk about Salon training and education. We really felt this was really a very important place to put some time and effort given we know like a lot of industries. So obviously is good or bad managers. So we can.

Overlook that piece of the education side and so we're excited to start rolling that piece out and other things regarding the technical trainers to get hands on in our salons I had mentioned some early findings at those salons that technical trainers are outperforming the system.

Yes ill add some more figures and context around that and some of the data that I'm quoting as November and December results. Just given it's been early days as we've scaled that up so fast but from a level of sales outperformance on an overall brand perspective, we are seeing that range from salons that have.

These trainers in them from anywhere from 4% above the rest of the system and on rent up to 14% in another and we're also seeing that requisite outperformance in style at hours and 90 day retention for those who have those design team members. Some are retaining four percentage, 4% better from a 90 day retention sign that even up to seven <unk>.

Send more stylist hours of work. So these are things early figures encouraged that there seems to be working on the right path regarding that investment and we're going to continue to do so in an effort to move the needle on that recruitment and retention side.

Got it that's helpful. And then just another one kind of on the customer wait times. So I think you had called it out as one to two months. So just curious like what your target.

And then if you're seeing any shifts in spend per visit.

I'm curious on any color there.

Yes.

As lessor on target, how often we're getting folks to visit I think we are going to be okay with with.

Stretching cycles out as long as we're increasing our traffic base. So.

Is thats between two things one just keeping those who are coming in whatever cycle. They are coming in at a better rate, which I think we have a ton of opportunity to do and probably the highest ROI and focus we can have right now we have a lot of traffic coming through our system, let's just keep them better and that will go a long long way is something that's in our control through the <unk>.

Element of as I mentioned, CRM and loyalty, bringing that stickiness, that's going to go a long way from the traffic we already have regardless, how often in the various reasons are coming through and then obviously, there's the opportunity to drive additional so we can drive additional folks and I'll just add to that pool, which will go a long way to effectuate that traffic number kind of rigs.

Our list of where that cycle is.

In terms of spend yes.

The spend has been up and Thats just been a product of price increases that franchisees in our system has been taking which has been quite in line.

With other industries in retail and what have you so kind of we're seeing anywhere from 20% to 25% higher tickets versus the pre COVID-19 level due to the price that has taken here.

Got it that's helpful. And then just my last question is just about the same sorry sales at about four 5% and the trends that Youre seeing there and then how does maybe vary by region and concept.

Yes, I would say probably more so by concept in our region.

Thank you to our press release, where you can have kind of the breakdown.

Of the various brands. So you can see supercuts and portfolio of brands being up.

Anywhere for the 6% to 7%.

And Thats, what really kind of.

Those couple groupings of buckets. The smart style brand is actually down on a year over year perspective, So I'll say disparities is really kind of driven by those brand perspectives.

Regionally within the brands, we actually see fairly uniform performance.

Which which actually.

It means that we can effectuate on kind of a.

Overall layer across the brand so really taking more of a brand approach and are happy to take a regional approach.

Got it thank you so much.

Thank you.

Alright, we're going to now take a question from the chest.

Let's talk about the health of the franchise system.

If you have great day.

<unk>.

Yes, no. It's a good question.

I appreciate you asking as I mentioned this comes back to.

Just continuing on the recovery.

Our franchisees have gone through a couple of years.

<unk>.

Of a difficult time, given what's happened through Covid.

And we're just focused on getting that business back on track I had mentioned stylist hours worked per our previous question about 20% down. So we have a lot of opportunity to drive our sales to drive franchisee traffic to drive franchisee profitability through increasing that workforce to making them more productive I think that will go a long way for our franchisees' businesses and really.

Everything we're doing here every program that we're looking to roll out from a technology platform perspective, as I mentioned from our efforts around recruiting and retention perspective from our customer marketing and 90 day retention that is all in an effort to look to increase franchisee sales and franchisee profitability.

<unk>, which we know is the most important thing right now.

Thank you Matt those are all the questions. We have for now thank you for joining the <unk> call.