Supercuts 2003 Annual Report Download - page 9

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Table of Contents
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 has developed a comprehensive point of sale system to accumulate and
monitor service and product sales trends as well as track its salon inventory. The point of sale data 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 size, the Company realizes the benefits
of buying retail products, supplies and salon fixtures directly from manufacturers. The Company is also able to gain market recognition for its
key brand names through local advertising and promotional programs. Furthermore, the Company can offer employee benefit programs,
training and career path opportunities that differ from its smaller competitors.
Salon Concepts:
The Company’s salon concepts focus on providing high quality hair care services and professional products, primarily to the middle consumer
market. Most of the Company’s salon concepts utilize approximately 1,200 square feet and are located in regional malls, strip centers, Wal-
Mart Supercenters, high street locations and department stores.
The Company’s domestic operations consists of 7,591 salons (2,427 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 . These salons are full-service, primarily mall-based salons providing complete hair care and beauty services aimed at moderate
to upscale, fashion-conscious consumers. The customer mix at these salons is approximately 75 percent women and both appointments and
walk-in customers are common. These salons offer a full range of custom styling, cutting, hair coloring, waving and waxing services as well as
professional hair care products. The average ticket is approximately $29. Regis Salons compete in their existing markets primarily by
emphasizing the high quality of the services provided. At June 30, 2003, the Company operated 1,096 Regis Salons. Revenues from Regis
Salons increased to $437.4 million, or 26.0 percent of the Company’s total revenues, in fiscal 2003.
MasterCuts. MasterCuts is a full-service mall-based salon group which focuses on the walk-in consumer (no appointment necessary) that
demands more moderately priced hair care services. MasterCuts salons emphasize quality hair care services, affordable prices and time-saving
services for the entire family. The customer mix at MasterCuts salons contains a high percentage of men and children. Many of the same retail
product lines sold in Regis Salons are also available in MasterCuts salons. In addition, the new MasterCuts private label haircare line appeared
in salons during fiscal 2003. The average sale at MasterCuts salons is approximately $15. At June 30, 2003, the Company operated 590
MasterCuts salons in North America. Revenues from MasterCuts salons grew to $170.3 million, or 10.1 percent of the Company’s total
revenues, in fiscal 2003.
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