NEW YORK (AP) -- Hair salon operator Regis Corp. said Wednesday it will no longer be paying dividends, noting it wasn't the best use of its excess capital.
The announcement comes as the Minneapolis-based company said it was implementing a new capital allocation policy that preserves a strong balance sheet and prevents unnecessary dilution. The company said it had issued $120 million of 5.75 percent senior, unsecured notes due 2017.
The company said it might use proceeds from the notes offering to refinance some of its convertible debt maturing next July, although it has yet to finalize its plans.
"While dividends are a viable option for some companies, management believes the best return on capital is through purposeful reinvestment into the business and share repurchases at reasonable prices," the company said.
The company last paid a 6 cent quarterly dividend on Nov. 19 to shareholders of record Nov. 5. Based on the company's approximate 56.6 million shares outstanding, Regis will save about $13.6 million a year by suspending its dividend.
Regis reported last month that it fell to a loss during the fiscal first quarter as sales at stores open at least a year fell and product sales declined. But revenue and its adjusted profit beat Wall Street expectations.
The company, which runs Supercuts, MasterCuts and other salons, said that sales at locations open at least a year fell 5.4 percent. This figure is a key gauge of a retailer's health because it excludes results from locations recently opened or closed. The average bill at these locations climbed 1.8 percent, but the number of customers dropped 7.2 percent.
Shares fell 19 cents to $15.84 during regular trading. Shares have been trading in a tight range of $14.15 to $19.14 over the past 52 weeks.