Supercuts 2008 Annual Report Download - page 31

Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations
Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) is designed to provide a reader of our
financial statements with a narrative from the perspective of our management on our financial condition, results of operations, liquidity and
certain other factors that may affect our future results. Our MD&A is presented in five sections:
• Management's Overview
• Critical Accounting Policies
•
Overview of Fiscal Year 2008 Results
•
Results of Operations
• Liquidity and Capital Resources
MANAGEMENT'S OVERVIEW
Regis Corporation (RGS) owns or franchises beauty salons and hair restoration centers. As of June 30, 2008, we owned, franchised or held
ownership interests in over 13,550 worldwide locations. Our locations consisted of 10,745 system wide North American and international salons,
92 hair restoration centers, and 2,714 locations in which we maintain an ownership interest less than 100 percent. Our salon concepts offer
generally similar products and services and serve mass market consumers. Our salon operations are organized to be managed based on
geographical location. Our North American salon operations include 10,273 salons, including 2,163 franchise salons, operating in the United
States, Canada and Puerto Rico primarily under the trade names of Regis Salons, MasterCuts, Trade Secret, SmartStyle, Supercuts and Cost
Cutters. Our international salon operations include 472 salons located in Europe, primarily in the United Kingdom. Hair Club for Men and
Women includes 92 North American locations, including 35 franchise locations. During fiscal year 2008, we had approximately 65,000
corporate employees worldwide.
Our growth strategy consists of two primary, but flexible, components. Through a combination of organic and acquisition growth, we seek
to achieve our long-term objective of six to ten percent annual revenue growth. We anticipate that going forward, the mix of organic and
acquisition growth will be roughly equal. However, depending on several factors, including the ability of our salon development program to keep
pace with the availability of real estate for new construction, hair restoration lead generation, the availability of attractive acquisition candidates
and same-store sales trends, this mix will vary from year to year. We believe achieving revenue growth of four to six percent, including same-
store sales increases of 0.5 to 2.5 percent, will allow us to increase annual earnings at a mid to high single-digit growth rate. We anticipate
expanding our presence in North America and the United Kingdom. In addition we anticipate our joint venture partners to continue to expand.
Maintaining financial flexibility is a key element in continuing our successful growth. With strong operating cash flow and balance sheet,
we are confident that we will be able to financially support our long-term growth objectives.
Salon Business
The strength of our salon business is in the fundamental similarity and broad appeal of our salon concepts that allow flexibility and multiple
salon concept placements in shopping centers and neighborhoods. Each concept generally targets the middle market customer, however, each
attracts a different demographic. Aside from the 160 store closings of our underperforming salons, we anticipate expanding all of our salon
concepts. When commercial opportunities arise, we anticipate testing and developing new salon concepts to complement our existing concepts.
An example of this would be the introduction of our new men's concept, RAZE, introduced in Minnetonka, MN during August 2008.
29