Supercuts 2011 Annual Report Download - page 10

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Table of Contents
High Quality, Professional Products. The Company's salons sell nationally recognized hair care and beauty products as well as a
complete line of private label products sold under the Regis, MasterCuts and Cost Cutters labels. The retail products offered by the
Company are intended to be sold only through professional salons. The top selling brands include Paul Mitchell, Biolage, Redken, Regis
designLINE, Nioxin, It's a 10, Tigi Bedhead, Sexy Hair Concepts, Kenra, Sebastian and the Company's various private label brands.
The Company has launched a product diversion website for the entire industry to use as a measurement tool to track diversion.
Diversion involves the selling of salon exclusive hair care products to unauthorized distribution channels such as discount retailers and
pharmacies. Diversion is harmful to the consumer because diverted product can be old, tainted or damaged. It is also harmful to the salon
owners and stylists because their credibility with the consumer may be questioned.
The Company has the most comprehensive assortment of retail products in the industry. Although the Company constantly strives to
carry an optimal level of inventory in relation to consumer demand, it is more economical for the Company to have a higher amount of
inventory on hand than to run the risk of being under stocked should demand prove higher than expected. The extended shelf life and
lack of seasonality related to the beauty products allows the cost of carrying inventory to be relatively low and lessens the importance of
inventory turnover ratios. The Company's primary goal is to maximize revenues rather than inventory turns.
The retail portion of the Company's business complements its salon services business. The Company's stylists and beauty
consultants are compensated and regularly trained to sell hair care and beauty products to their customers. Additionally, customers are
enticed to purchase products after a stylist demonstrates its effect by using it in the styling of the customer's hair.
Salon Concepts:
The Company's salon concepts focus on providing high quality hair care services and professional products, primarily to the middle
consumer market. The Company's North American salon operations consist of 9,419 salons (including 1,936 franchise salons), operating under
several concepts, each offering attractive and affordable hair care products and services in the United States, Canada and Puerto Rico. The
Company's International salon operations consist of 400 hair care salons located in Europe, primarily in the United Kingdom. The number of
new salons expected to be opened within the upcoming fiscal year is discussed within Management's Discussion and Analysis of Financial
Condition and Results of Operations. In addition to these openings, the Company typically acquires several hundred salons each year. The
number of acquired salons, and the concept under which the acquisitions will fall, vary based on the acquisition opportunities which develop
throughout the year.
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