Supercuts 2005 Annual Report Download - page 14

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SmartStyle. The SmartStyle salons share many operating characteristics of the Company’s other salon concepts; however, they are
located entirely in Wal-Mart Supercenters. SmartStyle has a walk-in customer base, pricing is promotional and services are focused on the
family. These salons offer a full range of custom styling, cutting, hair coloring, waving and waxing services as well as professional hair care
products. In addition, professional retail product sales contribute solidly to overall revenues. The Company also has 184 franchise Cost Cutters
salons located in Wal-Mart Supercenters.
Service revenues represent approximately 64 percent of SmartStyle’s total revenues. The average ticket at a SmartStyle salon is
approximately $17.
The average initial capital investment required for a new SmartStyle salon is typically $30,000, excluding average opening inventory costs
of approximately $10,000. Average annual salon revenues in a SmartStyle salon which has been open five years or more are approximately
$250,000. During fiscal year 2006, the Company plans to open approximately 200 new corporate SmartStyle salons and approximately ten
franchise salons in Wal-Mart Supercenters.
Strip Center Salons. The Company’s Strip Center Salons are comprised of company-owned and franchise salons operating in strip
centers across North America under the following concepts:
Supercuts. The Supercuts concept provides consistent, high quality hair care services and professional products to its customers at
convenient times and locations and at a reasonable price. This concept appeals to men, women and children, although male customers
account for over 65 percent of total haircuts. Service revenues represent 75 to 80 percent of Supercuts’ total corporate revenues. The
average sale at a corporate Supercuts salon is approximately $12.
The average initial capital investment required for a new Supercuts salon is typically $105,000, excluding average opening inventory
costs of approximately $7,000. Average annual salon revenues in a corporate Supercuts salon which has been open five years or more are
approximately $275,000. During fiscal year 2006, the Company plans to open approximately 75 new corporate Supercuts salons, and
anticipates that franchisees will open approximately 115 new franchise Supercuts salons.
Cost Cutters (franchise salons). The Cost Cutters concept is a full-service salon concept providing value-priced hair care services
for men, women and children. These full-service salons also sell a complete line of professional hair care products. Franchise revenues
from Cost Cutters salons are split relatively evenly between franchise revenues related to royalties and fees and those from product sales
to franchisees. During fiscal year 2006, the Company anticipates that Cost Cutters franchisees will open 60 new salons.
In addition to the franchise salons, the Company operates company-owned Cost Cutters salons, as discussed below under Promenade
Salons.
Promenade Salons . Promenade Salons are made up of successful regional company-owned salon groups acquired over the past
several years operating under the primary concepts of Hair Masters, Style America, First Choice Haircutters, Best Cuts, Cost Cutters,
BoRics, Magicuts, Holiday Hair and TGF, as well as other concept names. Most concepts offer a full range of custom hairstyling, cutting,
coloring and permanent wave, as well as hair care products. Hair Masters offers moderately-priced services to a predominately female
demographic, while the other concepts primarily cater to time-pressed, value-oriented families. Service revenues represent 80 to 85
percent of total company-owned strip center revenues. The average sale for a company-owned strip center salon is approximately $15.
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