Supercuts 2002 Annual Report Download - page 8

Table of Contents
High Quality Hair care Products.
Through Trade Secret and the Company’s other salons, Regis sells nationally-recognized hair care products
such as Matrix®, Paul Mitchell®, Sebastian®, Redken®, Tigi®, Back To Basics® and a complete line of products sold under the Regis label.
Salon branded products are typically sold only through professional salons and generate slightly higher gross margins than haircutting and
other salon services. The Company’s stylists are trained and compensated to sell hair care products to their customers. Sales of hair care
products increased 14.1 percent in fiscal 2002 to a record $412.7 million and represented 30.0 percent of company-owned revenues.
Control Over Salon Operations.
Regis controls the quality of operations and enjoys certain economies of scale in terms of certain corporate and
store level expenses. The Company has an extensive training program, including the production of training videos for use in the salons, to
ensure its hairstylists are knowledgeable in the latest haircutting and fashion trends and provide consistent quality hair care services.
Economies of Scale.
Management believes that due to its size and number of locations the Company has certain advantages which are not
available to single location salons or small chains. The Company uses its point-of-sale system to track inventory at the salons and to
accumulate and monitor service and product sales. This product and customer information is used to evaluate salon productivity and, in some
cases, to determine the most appropriate salon use for the location. Additionally, as a result of its volume purchases, the Company is able to
purchase hair care products, supplies and salon fixtures on an advantageous basis. The Company is also able to gain market recognition for the
Regis name and its salon concepts through national and local advertising and promotional programs. Furthermore, the Company has employee
benefit programs, training and career path opportunities which the smaller owner cannot provide.
Salon Concepts:
The Company has two reporting segments based on its management structure: domestic and international. The Company’s domestic segment
consists of 6,618 salons (2,224 franchised), operating under five concepts, each offering attractive and affordable hair care products and
services in the United States, Canada and Puerto Rico as discussed below:
Regis Salons . Regis Salons are full-service, mall-based salons providing complete hair care and beauty services aimed at moderate to upscale,
fashion-
conscious consumers. The customer mix at Regis Salons is approximately 75 percent women. These salons offer a full range of custom
hairstyling, cutting, coloring, permanent wave and manicuring as well as hair care products. The average sale at Regis Salons is approximately
$27. Regis Salons compete in their existing markets primarily by emphasizing the high quality of full services provided. The Company actively
monitors the prices charged by its competitors in each area and makes every effort to maintain prices which, although in the higher range of
local prices, remain competitive with prices of other salons offering similar, high quality services. At June 30, 2002, the Company operated
1,016 Regis Salons primarily in shopping malls in North America. Revenues from the Regis Salons increased to $416.2 million, or 28.6 percent
of the Company’s total revenues, in fiscal 2002. The Company expects to construct about 50 new Regis Salons in fiscal 2003.
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