Supercuts 2010 Annual Report Download - page 8

Table of Contents
Because the Company's various salon concepts target slightly different mass market customer groups, more than one of the
Company's salon concepts may be located in the same real estate development without impeding sales of either concept. As a result,
there are numerous leasing opportunities for all of its salon concepts.
While same-store sales growth plays an important role in the Company's organic growth strategy, it is not critical to achieving the
Company's long-term revenue growth objectives. However, same-store sales growth is important to achieving improved annual
operating profit. New salon construction and salon acquisitions (described below) are expected to generate low single-digit annual
revenue growth. The recent trend has been declining visitation patterns due to the current global economic condition and increasing
average ticket price resulting in negative to low single-digit same-store sales growth. The Company expects fiscal year 2011 same-store
sales to be in the range of negative 1.0 to positive 2.0 percent.
Pricing is a factor in same-
store sales growth. The Company actively monitors the prices charged by its competitors in each market
and makes every effort to maintain prices which remain competitive with prices of other salons offering similar services. Price increases
are considered on a market-by-market basis and are established based on local market conditions.
Salon Acquisition Growth. In addition to organic growth, another key component of the Company's growth strategy is the
acquisition of salons. With an estimated two percent worldwide market share, management believes the opportunity to continue to make
selective acquisitions exists.
Over the past 16 years, the Company has acquired 8,023 salons, expanding both in North America and internationally. When
contemplating an acquisition, the Company evaluates the existing salon or salon group with respect to the same characteristics as
discussed above in conjunction with site selection for constructed salons (conveniently located, visible, strong retailers within the area,
etc.). The Company generally acquires mature strip center locations, which are systematically integrated within the salon concept that it
most clearly emulates.
In addition to adding new salon locations each year, the Company has an ongoing program of remodeling its existing salons,
ranging from redecoration to substantial reconstruction. This program is implemented as management determines that a particular
location will benefit from remodeling, or as required by lease renewals. A total of 333 and 280 salons had major remodels in fiscal
years 2010 and 2009, respectively.
Recent Salon Additions. During fiscal year 2010, the Company constructed 217 new salons (139 company-owned and
78 franchise). Additionally, the Company acquired 26 company-owned salons, including 23 franchise salon buybacks.
During fiscal year 2009, the Company constructed 275 new salons (182 company-owned and 93 franchise). Additionally, the
Company acquired 177 company-owned salons, including 83 franchise salon buybacks.
Salon Closures. The Company evaluates its salon performance on a regular basis. Upon evaluation, the Company may close a
salon for operational performance or real estate issues. In either case, the closures generally occur at the end of a lease term and
typically do not require significant lease buyouts. In addition, during the Company's acquisition evaluation process, the Company may
identify acquired salons that do not meet operational or real estate requirements. Generally, at the time of acquisition limited value is
allocated to these salons, which are usually closed within the first year.
During fiscal year 2010, 269 salons were closed, including 204 company-owned salons and 65 franchise salons (excluding
23 franchise buybacks). In June of 2009, the Company approved a
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