Supercuts 2010 Annual Report Download - page 48

Table of Contents
Product Margin (Excluding Depreciation). Product margin was as follows:
Trade Secret, Inc. was sold by Regis Corporation on February 16, 2009. The agreement included a provision that Regis Corporation would
supply product to the purchaser at cost for a transition period.
The following tables breakout product revenue, cost of product and product margin as a percent of product revenues between product and
product sold to the purchaser of Trade Secret.
The basis point improvement in product margin other than sold to purchaser of Trade Secret as a percentage of product revenues during
fiscal year 2010 was due to a planned reduction in retail commissions paid to new employees on retail product sales.
The basis point improvement in product margin other than sold to purchaser of Trade Secret as a percentage of product revenues during
fiscal year 2009 was due to selling higher cost inventories in fiscal year 2008 obtained in conjunction with several acquisitions. In addition,
product margins improved due to the deconsolidation of the European franchise salon operations and a write-off of slow moving inventories in
fiscal year 2008. Partially offsetting the improvement was mix play, as a larger than expected percentage of product sales came from lower-
margin promotional items. We are not promoting or discounting at a higher rate, but we are continuing to see customers be more value-focused
through buying promotional items at a higher rate than prior periods.
The 80 basis point improvement in product margins as a percentage of product revenues during fiscal year 2008 was due to refinements
made to our inventory tracking systems. The refinements
46
(Decrease) Increase Over
Prior Fiscal Year
Years Ended June 30, Product Margin Margin as % of Product Revenues Dollar Percentage Basis Point(1)
(Dollars in thousands)
2010
$
270,710
50.6
%
$
(2,457
)
(0.9
)%
150
2009
273,167
49.1
(13,728
)
(4.8
)
(290
)
2008
286,895
52.0
16,246
6.0
80
(1) Represents the basis point change in product margin as a percent of product revenues as compared to the corresponding
period of the prior fiscal year.
For the Years Ended June 30,
Breakout of Product Revenue 2010 2009 2008
Product
$
514,631
$
523,968
$
551,286
Product sold to purchaser of Trade Secret
19,962
32,237
—
Total product revenues
$
534,593
$
556,205
$
551,286
For the Years Ended June 30,
Breakout of Cost of Product 2010 2009 2008
Cost of product
$
243,921
$
250,801
$
264,391
Cost of product sold to purchaser of Trade Secret
19,962
32,237
—
Total cost of product
$
263,883
$
283,038
$
264,391
For the Years Ended June 30,
Product Margin as % of Product Revenues 2010 2009 2008
Margin on product other than sold to purchaser of Trade Secret
52.6
%
52.1
%
52.0
%
Margin on product sold to purchaser of Trade Secret
—
—
—
Total product margin
50.6
%
49.1
%
52.0
%