Supercuts 2007 Annual Report Download - page 6

Because the Company’s various salon concepts target slightly different mass market customer groups, more than one of the
Company’s salon concepts may be located in the same real estate development without impeding sales of either concept. As a result, there
are numerous leasing opportunities for all of its salon concepts.
While same-store sales growth plays an important role in the Company’s organic growth strategy, it is not critical to achieving the
Company’s long-term revenue growth objectives. New salon construction and salon acquisitions (described below) are expected to
generate low-double-digit revenue growth. The trend for the past several years has been declining visitation patterns due to fashion trends
and increasing average ticket price resulting in flat to low-single-digit same-store sales growth. The Company expects fiscal year 2008
same-store sales growth to be consistent with this trend.
Pricing is a factor in same-store sales growth. The Company actively monitors the prices charged by its competitors in each market
and makes every effort to maintain prices which remain competitive with prices of other salons offering similar services. Historically, the
Company has not depended on price increases to drive same-store sales growth. However, price increases are considered on a market-by-
market basis and are established based on local market conditions.
Salon Acquisition Growth. In addition to organic growth, another key component of the Company’s growth strategy is the
acquisition of salons. With an estimated two percent world wide market share, management believes the opportunity to continue to make
selective acquisitions persists.
Over the past thirteen years, the Company has acquired 7,601 locations, expanding in both North America and internationally. When
contemplating an acquisition, the Company evaluates the existing salon or salon group with respect to the same characteristics as
discussed above in conjunction with site selection for constructed salons (conveniently located, visible, strong retailers within the area,
etc.). The Company generally acquires mature strip center locations, which are systematically integrated within the salon concept that it
most clearly emulates.
In addition to adding new salon locations each year, the Company has an ongoing program of remodeling its existing salons, ranging
from redecoration to substantial reconstruction. This program is implemented as management determines that a particular location will
benefit from remodeling, or as required by lease renewals. A total of 155 and 170 salons were remodeled in fiscal years 2007 and 2006,
respectively.
Recent Salon Additions. During fiscal year 2007, net of closures and relocations, the Company added approximately 550 salons
through new construction and acquisitions. The Company constructed 673 new salons (420 company-owned and 253 franchise).
Additionally, the Company acquired 354 company-owned salons, including 97 franchise salon buybacks. The Company’s largest fiscal
year 2007 salon acquisition consisted of 175 Fiesta Hair salons.
During fiscal year 2006, net of closures and relocations, the Company added over 450 salons through new construction and
acquisitions. The Company constructed 788 new salons (531 company-owned and 257 franchise). Additionally, the Company acquired
290 salons, including 142 franchise salon buybacks. The Company’s largest fiscal year 2006 salon acquisition included 105 Famous Hair
salons.
During fiscal year 2005, net of closures and relocations, the Company added over 700 salons through new construction and
acquisitions. The Company constructed 810 new salons (525 company-owned and 285 franchise). Additionally, the Company acquired
451 salons, including 139 franchise salon buybacks. The Company’s most significant fiscal year 2005 acquisitions included 129 TGF
salons and 67 HeadStart salons.
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