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What is it with Steve Hudson and hair? He's a former bean counter but he's got a golden touch with tresses, a financier who has developed a way with makeup, and now he's at it again transforming a chain of 725 salons into upscale beauty boutiques.

One big win in the hair care business was a career comeback for the Toronto accountant, who oversaw the spectacular rise and fall of financing firm Newcourt Credit Group Inc. in the 1990s. Now with a second success under his belt and a new project for industry leader Regis Corp. kicking off, the Canadian entrepreneur's reinvention appears to be complete.

Money in hair

The proving ground for Mr. Hudson's current career was the turnaround of the Hair Club for Men and Women, a late-night infomercial laughing-stock that became a coveted asset under his stewardship.

Not only did this seemingly incongruous venture make Mr. Hudson and his investors millions, it also cemented his relationship with Minneapolis-based hair care giant Regis, for whom he is now orchestrating another big makeover - the transformation of its underperforming Trade Secret hair salons.

Regis bought Hair Club from Mr. Hudson in 2004, for a big premium over what he had paid, with nary a complaint - the transplant and weave emporium has been a stellar performer even in the down market that has sapped the firm's share price and earnings.

Regis cast its lot early in Mr. Hudson's next venture, taking a 20-per-cent initial stake when he bought beauty chains PureBeauty Inc. and BeautyFirst in 2006, then buying them outright this month for an undisclosed but no doubt tidy sum.

The Hudson factor

Now in his effort to get Trade Secret out of the doldrums, Regis chief executive officer Paul Finkelstein has gone straight to Mr. Hudson. All he had to do was look at the numbers. In the past 12 months, comparable store sales at Mr. Hudson's two chains rose by an average of 5.1 per cent. Trade Secret, by contrast, saw its sales fall 8 per cent during the same period.

The magic appears to lie in a combination of things - a highly disciplined operating strategy, making big demands on employees while at the same time giving them lots of control, and a consistent effort to give customers the service and products that will keep them coming back.

Mr. Hudson also understands his products. Like Hair Club's Sy Sperling before him, Mr. Hudson "is also a client," as Mr. Sperling used to say, and uses skin and hair products eagerly.

Recession-proof?

So where does he see the future prospects for a sector based on discretionary spending at a time many economists have characterized as a U.S. recession?

With the clout of Regis behind him - he'll oversee 725 stores in total with the combination of Trade Secret, PureBeauty and BeautyFirst - Mr. Hudson said he'll have the power to bring in the best product lines.

It's a good strategy in an industry where a deep divide has emerged, with most women either choosing discount stores or high-end chains with unique offerings such as Ulta and Sephora, says analyst Neely Tamminga of Piper Jaffray & Co. Go high-end, and you have to have the products to draw in customers.

There's also some "recession resistance" to the beauty industry, Ms. Tamminga says, with many women seeing makeup and hair products as an essential need rather than a discretionary item.

Steve Hudson

Founder, Cameron Capital Corp.

Background: Former head of Newcourt Credit Group Inc. Took over and turned around Hair Club for Men and Women, and salon chains Pure Beauty Inc. and BeautyFirst.

Current task: Rebrand and restructure Regis Corp.'s Trade Secret salons.

Quote:

"Steve is the best operator I've ever seen, bar none. ... If I'd known him 20 years ago, I'd have been a much better investment banker."

>Stephen Powell, business partner