Supercuts 2006 Annual Report Download - page 32

Item 7.
Management’s Discussion and Analysis of Financial Condition and Results of Operation
Management’s Discussion and Analysis of Financial Condition and Results of Operations (MD&A) is designed to provide a reader of our
financial statements with a narrative from the perspective of our management on our financial condition, results of operations, liquidity and
certain other factors that may affect our future results. Our MD&A is presented in 5 sections:
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Management’s Overview
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Critical Accounting Policies
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Overview of Fiscal Year 2006 Results
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Results of Operations
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Liquidity and Capital Resources
MANAGEMENT’S OVERVIEW
Regis Corporation (RGS) owns or franchises beauty salons, hair restoration centers and educational establishments. As of June 30, 2006,
our worldwide operations included 11,333 system wide North American and international salons, 90 hair restoration centers and 54 beauty
schools. Each of our salon concepts offer generally similar products and services and serves mass market consumers. Our salon operations are
organized to be managed based on geographical location. Our North American salon operations include 9,293 salons, including 2,187 franchise
salons, operating in the United States, Canada and Puerto Rico primarily under the trade names of Regis Salons, MasterCuts, Trade Secret,
SmartStyle, Supercuts and Cost Cutters. Our international salon operations include 2,040 salons, including 1,587 franchise salons, located
throughout Europe, primarily in the United Kingdom, France, Italy and Spain. In December 2004, we purchased Hair Club for Men and
Women. This enterprise includes 90 North American locations, including 42 franchise locations. Our beauty schools are managed in aggregate,
regardless of geographical location, and include 50 locations in the United States and four locations in the United Kingdom. During fiscal year
2006, we had approximately 59,000 corporate employees worldwide.
Our growth strategy consists of two primary, but flexible, components. Through a combination of organic and acquisition growth, we seek
to achieve our long-term objective of eight to 12 percent annual revenue growth. We anticipate that going forward, the mix of organic and
acquisition growth will be roughly equal. However, depending on several factors, including the ability of our salon development program to
keep pace with the availability of real estate for new construction, student enrollment, hair restoration lead generation, the availability of
attractive acquisition candidates and same-store sales trends, this mix will vary from year to year. We believe achieving revenue growth of
eight to 12 percent, including same-store sales increases in excess of two percent, will allow us to increase annual earnings at a low-double-
digit growth rate. We anticipate expanding our presence in both North America and Europe. Additionally, we desire to enter the Asian market
within the next five years.
Maintaining financial flexibility is a key element in continuing our successful growth. With strong operating cash flow and balance sheet,
we are confident that we will be able to financially support our long-term growth objectives.
Salon Business
The strength of our salon business is in the fundamental similarity and broad appeal of our salon concepts that allow flexibility and
multiple salon concept placements in shopping centers and neighborhoods. Each concept generally targets the middle market customer,
however, each attracts a different demographic. We anticipate expanding all of our salon concepts. In addition, we anticipate testing and
developing new salon concepts to complement our existing concepts.
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