Supercuts 2012 Annual Report Download - page 25

Table of Contents
programs and weather conditions. These factors may cause our comparable same-store sales results to differ materially from prior periods and
from our expectations. Our comparable same-store sales results for the twelve months ended June 30, 2012 declined 3.1 percent compared to
the twelve months ended June 30, 2011. During fiscal year 2012, we impaired $67.7 and $78.4 million of goodwill associated with our Regis
salon concept and Hair Restoration Centers reporting units, respectively. We impaired $74.1 million of goodwill associated with our
Promenade salon concept during fiscal year 2011 and $35.3 million of goodwill associated with our Regis salon concept during fiscal year
2010. We also impaired $41.7 million of goodwill associated with our salon concepts in the United Kingdom during fiscal year 2009. If
negative same-store sales continue and we are unable to offset the impact with operational savings, our financial results may be further
affected. We may be required to take additional impairment charges and to impair certain long-lived assets and goodwill and such impairments
could be material to our consolidated balance sheet and results of operations. The concept that has the highest likelihood of impairment is
Promenade. As previously disclosed, the Company has agreed to sell the Hair Restoration Centers reporting unit in the first half of fiscal year
2013; however, until this reporting unit is sold it is reasonably likely there could be impairment of goodwill in future periods.
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.
The Board of Directors is engaged in a strategic review of non-core assets that may impact our business and results of operations.
Our strategic review of non-core assets may adversely affect our financial condition and operating results or impose other risk, such as the
following:
• Disruption of our business or distraction of our employees and management;
• Difficulty recruiting, hiring, motivating and retaining talented and skilled personnel;
• Increased stock price volatility;
• Difficulty in establishing, maintaining or negotiating business or strategic relationships or transactions; and
• Increased advisory fees.
On July 13, 2012, the Company entered into a definitive agreement to sell its Hair Club for Men and Women business (Hair Club), a
provider of hair restoration services. The transaction is expected to close during the first half of fiscal year 2013.
Changes in our management and organizational structure may affect our operating results.
On July 11, 2012, the Company announced that Mr. Daniel J. Hanrahan was appointed President and Chief Executive Officer of the
Company, effective August 6, 2012. The changes to our management and organizational structure may adversely affect our financial condition
and operating results or impose other risk, such as the following:
• Disruption of our business or distraction of our employees and management;
• Difficulty recruiting, hiring, motivating and retaining talented and skilled personnel;
• Increased stock price volatility; and
• Difficulty in establishing, maintaining or negotiating business or strategic relationships or transactions.
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