Supercuts 2002 Annual Report Download - page 6

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Table of Contents
PART I
Item 1. Business
Background
Regis Corporation (the Company), based in Minneapolis, Minnesota, is the largest owner, operator, franchisor and acquirer of hair and retail
product salons in the world. The Company operates or franchises 6,618 domestic salons and 2,066 international salons. The Company executes
its domestic operations through five primary concepts: Regis Salons, MasterCuts, Trade Secret, SmartStyle and Strip Center (primarily
Supercuts and Cost Cutters) salons. Each of the concepts offers similar products and services, concentrates on the mass-market consumer
marketplace and have consistent distribution channels. All of the salons within the North American concepts are located within high traffic
retail shopping locations and the individual salons generally display similar economic characteristics. The Company’s international operations,
which are primarily in Europe, are located in salons operating in malls, leading department stores, mass merchants and high-street locations.
Based on the way in which the Company manages its business, it has presented its domestic and international operations as two reportable
operating segments, domestic and international. During fiscal 2002, the Company and its franchisees provided services to 125 million
customers worldwide. The Company has approximately 43,000 employees worldwide.
Industry Overview
Management estimates that annual revenues of the hair care industry are $53 billion in the United States and $135 billion worldwide. The
industry is highly fragmented with the vast majority of hair care salons independently owned. However, the influence of chains, both franchise
and company-owned, has increased substantially, although still accounting for a small percentage of total locations. Management believes that
chains will continue to increase their presence. Management also believes that the demand for salon services and products will increase in the
next decade as the population ages and desires additional hair care services, such as coloring.
Business Strategy
The Company’s goal is to provide high quality affordable hair care services and products to wide ranges of customers through physically
attractive salons located in high traffic and convenient locations. The key elements of the Company’s strategy to achieve these goals are the
following:
Consistent, Quality Service. The Company is committed to meeting its customer’s hair care needs by providing competitively priced services
and products in high traffic retail locations with professional and knowledgeable hairstylists. The Company’s operations and marketing
emphasize high quality services to create customer loyalty, to encourage referrals and to distinguish the Company’s salons from its
competitors. The major services supplied by the Company’s salons are haircutting and styling, hair coloring, shampooing, conditioning and
permanent waving. To promote quality and consistency of services provided throughout the Company’s salons, Regis has full and part-time
artistic directors whose duties are to teach and train salon operators and to instruct the stylists in current styling trends.
3