Supercuts 2011 Annual Report Download - page 26

Table of Contents
If we are unable to improve our comparable same-store sales on a long-term basis or offset the impact with operational savings, our
financial results may be affected. Furthermore, continued declines in same-store sales performance may cause us to be in default of certain
covenants in our financing arrangements.
Failure to control cost may adversely affect our operating results.
We must continue to control our expense structure. Failure to manage our cost of product, labor and benefit rates, advertising and marketing
expenses, operating lease costs, other store expenses or indirect spending could delay or prevent us from achieving increased profitability or
otherwise adversely affect our operating results.
Changes in our key relationships may adversely affect our operating results.
We maintain key relationships with certain companies, including Walmart. Termination or modification of any of these relationships,
including Walmart, could significantly reduce our revenues and have a material and adverse impact on our business, our operating results and
our ability to grow.
Changes in fashion trends may impact our revenue.
Changes in consumer tastes and fashion trends can have an impact on our financial performance. For example, trends in wearing longer hair
may reduce the number of visits to, and therefore, sales at our salons.
Changes in regulatory and statutory laws may result in increased costs to our business.
With approximately 12,700 locations and 55,000 employees worldwide, our financial results can be adversely impacted by regulatory or
statutory changes in laws. Due to the number of people we employ, laws that increase minimum wage rates or increase costs to provide
employee benefits may result in additional costs to our company. Compliance with new, complex and changing laws may cause our expenses to
increase. In addition, any non-compliance with these laws could result in fines, product recalls and enforcement actions or otherwise restrict our
ability to market certain products, which could adversely affect our business, financial condition and results of operations. We are also subject to
laws that affect the franchisor-franchisee relationship.
If we are not able to successfully compete in our business segments, our financial results may be affected.
Competition on a market by market basis remains strong. Therefore, our ability to raise prices in certain markets can be adversely impacted
by this competition. If we are not able to raise prices, our ability to grow same-store sales and increase our revenue and earnings may be
impaired.
If our joint ventures are unsuccessful our financial results may be affected.
We have entered into joint venture arrangements with other companies in the hair salon and beauty school businesses in order to maintain
and expand our operations in the United States, Asia and continental Europe. If our joint venture partners are unwilling or unable to devote their
financial resources or marketing and operational capabilities to our joint venture businesses, or if any of our joint ventures are terminated, we
may not be able to realize anticipated revenues and profits in the countries where our joint ventures operate and our business could be materially
adversely affected. If our joint venture arrangements are not successful, we may have a limited ability to terminate or modify these
arrangements. If any of our joint ventures are terminated, there can be no assurance that we will be able to attract new joint venture partners to
continue the activities of the terminated joint venture or to operate independently in the countries in which the terminated joint venture
conducted business.
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