Supercuts 2012 Annual Report Download - page 26

Table of Contents
Failure to control cost may adversely affect our operating results.
We must continue to control our expense structure. Failure to manage our cost of product, labor and benefit rates, advertising and
marketing expenses, operating lease costs, other store expenses or indirect spending could delay or prevent us from achieving increased
profitability or otherwise adversely affect our operating results.
Changes in our key relationships may adversely affect our operating results.
We maintain key relationships with certain companies, including Walmart. Termination or modification of any of these relationships,
including Walmart, could significantly reduce our revenues and have a material and adverse impact on our business, our operating results and
our ability to grow.
Changes in fashion trends may impact our revenue.
Changes in consumer tastes and fashion trends can have an impact on our financial performance. For example, trends in wearing longer
hair may reduce the number of visits to, and therefore, sales at our salons.
The health care reform legislation may adversely affect our operating results.
In March 2010, the United States government enacted comprehensive health care reform legislation, which, among other things, includes
guaranteed coverage requirements, eliminates pre-existing condition exclusions and annual and lifetime maximum limits, restricts the extent to
which policies can be rescinded and imposes new and significant taxes on health insurers and health care benefits. The current legislation
imposed implementation dates beginning in 2010 and extending through 2020, with many of the reform components requiring additional
guidance from government agencies or federal regulators. Due to the lack of interpretative guidance and the phased-
in nature of the reform, it is
difficult to determine at this time what the impact of the health care reform legislation will be on our future financial results. Possible adverse
impacts of the health care reform legislation include, but are not limited to, increased costs, exposure to expanded liability and requirements for
us to revise the way we provide health care and other benefits to our employees. As a result, the impact of the health care reform legislation
could have a material and adverse impact on our results of operations.
Changes in regulatory and statutory laws may result in increased costs to our business.
With approximately 12,600 locations and 52,000 employees worldwide, our financial results can be adversely impacted by regulatory or
statutory changes in laws. Due to the number of people we employ, laws that increase minimum wage rates or increase costs to provide
employee benefits may result in additional costs to our company. Compliance with new, complex and changing laws may cause our expenses
to increase. In addition, any non-compliance with these laws could result in fines, product recalls and enforcement actions or otherwise restrict
our ability to market certain products, which could adversely affect our business, financial condition and results of operations. We are also
subject to laws that affect the franchisor-franchisee relationship.
If we are not able to successfully compete in our business segments, our financial results may be affected.
Competition on a market by market basis remains strong as many smaller chain competitors are franchise systems with local operating
strength in certain markets. Therefore, our ability to raise prices in certain markets can be adversely impacted by this competition. If we are not
able to raise prices, our ability to grow same-store sales and increase our revenue and earnings may be impaired.
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