Supercuts 2008 Annual Report Download - page 25

resources or marketing and operational capabilities to our joint venture businesses, or if any of our joint ventures are terminated, we may not be
able to realize anticipated revenues and profits in the countries where our joint ventures operate and our business could be materially adversely
affected. If our joint venture arrangements are not successful, we may have a limited ability to terminate or modify these arrangements. If any of
our joint ventures are terminated, there can be no assurance that we will be able to attract new joint venture partners to continue the activities of
the terminated joint venture or to operate independently in the countries in which the terminated joint venture conducted business.
We may not be able to successfully convert the product assortment in Trade Secret concepts.
We are in the early stages of converting the current product assortment in our Trade Secret concept to an assortment of products that
includes professional hair care, skin, cosmetics and bath products. We believe that the conversion of the product assortment will attract new
customers and improve comparable store sales. There can be no assurance that we will be able to expand our business through the acceptance of
an assortment of products that includes professional hair care, skin, cosmetics and bath products. If we are not able to execute this strategy, our
comparable store sales and operating results may be adversely affected and could result in goodwill impairment.
Changes in manufacturers' choice of distribution channels may negatively affect our revenues.
The retail products that we sell are licensed to be carried exclusively by professional salons. The products we purchase for sale in our salons
are purchased pursuant to purchase orders, as opposed to long-term contracts and generally can be terminated by the producer without much
advance notice. Should the various product manufacturers decide to utilize other distribution channels, such as large discount retailers, it could
negatively impact the revenue earned from product sales.
We may not be able to achieve the anticipated costs savings related to our approved plan to close up to 160 stores in fiscal year 2009.
In July of 2008, the Company approved a plan to close up to 160 underperforming company-owned salons in fiscal year 2009. The timing
and costs of lease terminations and other costs associated with the salon closures may impact the Company's ability to realize the cost savings
anticipated from the Company's approved plan. If we are unable to execute our store closures as planned, our operating results may be adversely
affected.
Changes to interest rates and foreign currency exchange rates may impact our results from operations.
Changes in interest rates will have an impact on our expected results from operations. Currently, we manage the risk related to fluctuations
in interest rates through the use of variable rate debt instruments and other financial instruments. During fiscal year 2008, the National
Association of Insurance Commissioners downgraded Regis' private placement debt from investment-grade private placement to non-investment
grade. The downgrade does not have any immediate effect on the private placement debt outstanding and corresponding interest rate as of
June 30, 2008. Any future non-investment grade private placement debt would result in a substantially higher interest rate. The downgrade has
no impact on the Company's current revolving credit facility or its ability to secure future bank borrowings. See discussion in Part II, Item 7A,
"Quantitative and Qualitative Disclosures about Market Risk," for additional information.
Item 1B. Unresolved Staff Comments
None.
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