Regis Corp (RGS) 2004 Q1 法說會逐字稿

Good morning. My name is Heather and I will be your conference facilitator today. At this time I would like to welcome everyone to the Regis Corporation first-quarter 2004 earnings conference call. All lines have been placed on mute to prevent any background noise. If anyone has not received a copy of this morning’s press release, please call Regis Corporation at 952-947-7798 and a copy will be faxed to you immediately.

Before management begins their formal remarks I would like to remind you that to the extent of the company's statements or comments this morning represent forward-looking statements. I refer you to the risk factors and other cautionary factors in today's news release as well as the company's SEC filings. In addition, this call is being recorded on behalf of Regis Corporation and is copyrighted material. It cannot be recorded or rebroadcast without the company's express permission. And your participation implies consent to our taping. If you wish to access the replay for this call you may do so by dialing 1-800-428-6051, access code 307-033.

With us this morning are Paul Finkelstein, President and Chief Executive Officer, any Randy Pearce, Chief Financial Officer and Executive Vice President. After management has completed its review of the quarter we will open the call for questions. (OPERATOR INSTRUCTIONS) I'd now like to turn the call over to Paul Finkelstein for his comments. Paul, you may begin.

Thank you and good morning, everyone. We had an excellent first quarter. Revenues increased 15.4 percent to $461 million with same store sales exceeding plan increasing 2.6 percent. Our retail product sales were particularly strong with the Trade Secret division leading the pack. Our first-quarter comps were fueled by a very strong August which we feel mirrored the mailing of the federal tax refunds. September ended up with a more normal pattern and October looks to be significantly stronger than September. We continue to expect system wide sales to be in excess of $3 billion for fiscal year 2004.

Net income for the period increased 26.6 percent to $25 million, 55 cents a share exceeding the upper end of our guidance by 3 cents a share. More than half of the incremental earnings above our guidance can be attributed to stronger than expected same-store sales, a slight improvement in our corporate income tax rate, and lower-than-expected marketing costs were other significant contributors. Our results also include a 3 cent expense relating to the final regulations issued by the IRS on the taxation of strip (indiscernible) life insurance arrangements. In particular, we wrote off loans associated with these policies and at the same time made our executives whole by reimbursing them for the adverse tax consequences of this transaction. The net result is that our executives received no additional benefits from these transactions. Many companies are facing the same problem. Our research shows that most will be handling this issue as we have.

First quarter EBITDA increased 17 percent to over $61 million. During the first quarter we acquired 97 salons. Virtually all of these salons represented franchisee buybacks. These acquisitions serve two purposes -- not only were we able to acquire a very good group of salons, but many of these franchisees were actively expanding in Wal-Mart supercenters, and as a result we expect to see an increase in our SmartStyle Company owned salon growth in Wal-Mart centers over the coming years. As we discussed in our last conference call, we consider the 286 salon Opal Concepts acquisition which closed in mid-May as part of our 2004 acquisition budget. By the end of this fiscal year we expect to spend up to 75 million and add 400 to 500 salons by acquisition.

We ended the quarter with 9,707 salons. Organically we built 94 corporate salons and added 73 franchise salons. A total of 79 salons were relocated or closed doing the quarter. Total debt at the end of the quarter was $303 million and our debt to cap ratio improved to 34 percent. We are projecting our debt at the end of the fiscal year to be slightly over 300 million with our debt to cap ratio being in the range of 30 to 34 percent. Let's take a look at our expectations for the second quarter and the full fiscal 2004 year.

Fiscal 2004 second-quarter revenue is expected to increase 11 percent to approximately $460 million. Earnings are expected to be in the range of 54 to 56 cents per diluted share, an increase of 4 to 8 percent compared to last year. Please keep in mind, last year's second-quarter earnings were impacted by a positive book to physical inventory adjustment which resulted in an increase to net income of $2.8 million or 6 cents per share. If you eliminate this adjustment our forecasted earnings would be 17 to 22 percent over last year's results. Same store sales are expected to increase 1 to 1.5 percent.

For the fiscal year we're expecting consolidated revenue to increase 12 to 14 percent to approximately $1.9 billion. Exclusive of future acquisitions, earnings are expected to increase 13 to 15 percent to a range of $2.17 to $2.20 per diluted share. There are some additional points I'd like to make before Randy completes the conference call. We have virtually finished the design of our Vidal Sassoon studio concept and plan to open our first store in the Chicago metropolitan area sometime during the third quarter of fiscal 2004. Two Vidal Sassoon studio salons will open in the UK during the winter. I'd now like to discuss our retail product sales with you.

Many of our investors have questioned whether or not our strong retail product sales increases were due to the addition of new lines or new product categories, or were the result of execution. Execution is, in fact, the primary driver of our very strong retail product sales. We are very good product merchants. We continue to improve communication to our salons, product knowledge education has also been expanded, our education classes concentrate on the top lines at each of our operating divisions. Last year many of our largest selling lines, including Matrix, Mitchell and TG (ph) were struggling. This year these top lines are performing much better. In virtually every instance we are the number one account for our primary vendors. We're doing a much better job of partnering with these vendors.

The vendors I'm referring to include L'Oreal, Procter & Gamble, Paul Mitchell, TG, OPI and many others. By and large these companies sell to distributors. These same vendors are doing a much job in partnering with us, with the relationship being more of a retail partner relationship that focuses on stylists and customers rather than a relationship of selling to a distributor. The difference in such a relationship is significant and our sales reflect this. We do have certain very hot categories such as appliances and nail care where our primary resource OPI is experiencing extremely strong sales.

Trade Secret's performance continues to be very impressive. Our average ticket has increased significantly and this division is starting to build a nationally recognized brand. We have a significant amount of advertising and marketing support for Trade Secrets from our key vendors which have significantly increased our brand recognition factor. The Trade Secret brand is positioned to become every bit as important as our Supercuts, (indiscernible), Regis and Vidal Sassoon brands. In conclusion, we are very gratified with our first quarter results. We also understand that there are plenty of opportunities for us to improve our performance, but basically we are very satisfied with our strategy and our ability to consistently deliver double digit top and bottom line growth. Randy will now complete our presentation.

Good morning, everyone. We're very pleased today to report record performance both in terms of first quarter revenues as well as earnings. Our revenues increased over 15 percent during the quarter, and our net income increased nearly 27 percent to $25 million or 55 cents per diluted share. Our first quarter performance exceeded the upper end of our guidance by 3 cents per share and exceeded the Street consensus estimate as well. Our first quarter earnings performance was highlighted by stronger than expected same-store sales and an improvement in our corporate income tax rate. Same-store sales for the quarter exceeded our expectations by approximately 1 full percentage point which resulted in about 2.5 cents of incremental earnings. In addition, our corporate income tax rate improved to 36.5 percent which incrementally benefited our earnings by three quarters of a penny.

Let me now jump in and give you more detail behind our first quarter results, and I'll start first by discussing revenues. Our consolidated revenues increased 15.4 percent to a record $461 million. As you know, our long-term growth expectations include both organic and acquisition growth, with each representing roughly half of our total revenue growth. This quarter our organic growth represented 41 percent of total revenue growth while acquisitions represented the remaining 59 percent. We're very pleased with the execution of both strategies during the quarter. Obviously these percentages will vary on a quarter by quarter basis due to the timing of new store openings and our acquisitions. However, over a longer period of time the mixture of organic and acquisition growth should be very consistent with our long-term expectations.

Our service sales were up 15.2 percent and our higher (technical difficulty) retail product sales grew 19.4 percent. In addition, our product sales mix for the quarter grew to 30.3 percent of total company-owned sales, and that compares to 29.5 percent mix for the same period last year. The improvement in our product sales mix can largely be attributed to the strength of our retail product comps this past quarter. In addition, total franchise revenues grew about 1 percent in the first quarter to $26 million.

Breaking this total out into its various components, our franchise royalties and fees increased nearly 6 percent in the first quarter while franchise product sales declined by about 9 percent. The decrease in franchise product sales and the modest increase in franchise royalties and fees can be primarily attributed to the 95 franchise salons we acquired during the quarter. Our franchise business remains quite healthy, as evidenced by the 73 new franchise salons that we added during the first quarter. You'll find a table in our press release today that breaks out our first quarter revenues for each of our salon divisions.

When you add in sales from our franchisees salons, we are on track to report systemwide sales of over $3 billion for our entire 2004 fiscal year. As we reported in our press release on October 7th, consolidated same-store sales for the quarter grew 2.6 percent which was a full percentage point higher than our expectations. Service comps, which increased 40 basis points in the quarter, continues to be impacted by the economy, fashion trends, and weak mall traffic. Long-term however, we anticipate that our service sales -- same store comps, will return to the range of 2 to 4 percent. Our retail product comps grew a very strong 7.9 percent in the quarter. As Paul mentioned earlier, our retail product business continues to benefit from very good merchandising execution.

This execution has allowed us to annually expand our market share in the professional hair care product market while establishing Trade Secret as the only nationally recognized retail product salon. Today we estimate that Regis Corporation has a 12 to 15 percent share of the entire professional product market in the United States. I'll now talk a bit about our first quarter gross margins.

Our first quarter overall combined gross margin rate came in essentially on plan at 45.1 percent of total company owned sales. This rate was 20 basis points lower than the same period last year largely due to our retail product margins which I'll address in just a moment. Let's first talk about service margins. Our first quarter service margin came in essentially on plan at 43.8 percent, which was on the higher end of our guidance. Our first quarter service margin rate was also comparable to that of the first quarter last year, so I don't think there's much need to discuss that line item further. Looking ahead, we expect that our service margins will continue to be in the mid to high 43 percent range for the remainder of fiscal 2004. I'll now address our retail product margins.

During the first quarter our retail product margins came in at 48.1 percent. Our first-quarter rate was a bit below what we originally planned and was also 50 basis points lower than the same quarter last year. This reduction was primarily the result of two factors, and first relates to sales mix. The two divisions that had the highest product comps in the quarter, which was Trade Secret and our international divisions, those two divisions had the lowest product margins when compared to our other divisions. The second factor relates to our May, 2003 acquisition of Opal Concepts. Product costs in the Opal business are a bit higher than our core business because of the unique product mix sold by Opal which we are purchasing through distributors today. Product margins for all of fiscal 2004 are expected to be in the low to mid 48 percent range. I'll now discuss our rent expense.

Our consolidated rent in the first quarter came in at 14.5 percent of company-owned revenue which was a bit better than plan due to higher than expected comps. Our first quarter rate was 10 basis points higher than the same period a year ago primarily due to rate increases in base rents as well as a slight increase in common area maintenance costs. We expect our rent expense for all of fiscal 2004 to be approximately 15 percent of sales. I'll now address our direct salon expense category and, as you know, that category includes costs directly incurred by the salon such as salon advertising, insurance, utilities and janitorial costs.

This expense category came in at 8.9 percent of first-quarter sales which was better than our initial plan and was 60 basis points better than the rate we reported in a first-quarter last year. The improvement was primarily due to lower than expected salon level advertising in the quarter as well as reduced freight costs. While advertising costs were lower than expected for the quarter, our outlook for the balance of the fiscal year is for our advertising expenditures to be on plan. Freight cost continued to improve as a larger percentage of our salon shipments are now made through pooled distribution, which is one of the lowest cost methods of shipping. Looking ahead to the balance of our fiscal 2004, we continue to expect the direct salon expense category to be comparable to our fiscal year 2003 rate of 9 percent. I'll now address the line item titled franchise direct costs.

As expected, franchise direct costs improved 80 basis points in the first quarter of fiscal 2004 to 52.5 percent. This improvement is the direct result of the consolidation of our Jean Louis David and GGG back office functions in France. For fiscal year 2004, we expect that franchise direct costs, that category should improve as much as 300 basis points to a range of 53.5 to 54 percent of total franchise revenues. I'll now address our corporate overhead expense which is labeled on the P&L as corporate and franchise support costs.

All of the expenses within the corporate and franchise support cost category relate to costs associated with our field supervision, our salon training and promotions, our two distribution facilities as well as our corporate office. This expense category for the first quarter came in on plan at 9.9 percent, which was a slight improvement of 10 basis points over the same quarter last year. We continue to expect the full 2004 fiscal year rate to improve 20 to 40 basis points to the low 9 percent range. Consistent with the last two years, we do expect modest improvement in this category each year as we continue to leverage our corporate fixed cost structure. I'll now switch to our two depreciation and amortization expense categories.

Both categories were consistent with our expectations for the quarter and were comparable to the prior year first-quarter results. During the first quarter this year the salon portion of our D&A was 3.4 percent and the corporate portion was 7/10 of 1 percent. Looking ahead to the balance of our current fiscal year, we continue to expect that the rates for both categories should be comparable to those that we reported here in the first quarter. The combined effect of all of the revenue and the expense items I've just discussed have caused our four wall salon contribution rate, before any corporate overhead allocation, to improve 30 basis points to 18.3 percent of first quarter company-owned sales.

This improvement reflects the strength of our business model and our ability to execute our growth strategy profitably. Given the inconsistency in the economy, we're quite pleased with our salon performance. After factoring in corporate overhead our overall operating income increased in the first-quarter to over $43 million or 9.4 percent of sales which was up 30 basis points from the rate we reported in the same period a year ago.

I'll now drop down to the interest expense line which came in at $4.4 million or 9/10 of 1 percent of first-quarter sales. That was an improvement of 40 basis points from the first quarter last year. Our total debt at the end of September came in generally where we expected it to be, standing at $303 million, which was virtually identical to the $302 million of debt that we had at June 30th. Our debt to capitalization ratio continues to remain solidly investment grade, standing at exactly 34 percent at the end of September, which was a slight improvement from the June 30th rate of 34.9 percent. We continue to feel that our internal cash flow that we generate, and our available debt capacity, should be sufficient to cover our salon expansion costs as well as our scheduled debt retirements and our dividend payments.

We continue to expect that our EBITDA this fiscal year should increase to approximately $250 million and our after-tax cash flow should grow to about $172 million. We expect to spend about $85 to $90 million of our cash flow on salon and corporate capital expenditures. As you can appreciate, acquisitions are always a bit harder to predict due to the timing of when opportunities present themselves, however, this year we're budgeting to spend another $60 to $75 million or so of cash on acquisitions. Based on these budgeted assumptions, we do not expect to see a material change in our overall levels of debt. However, our debt to capitalization ratio should continue to improve as the fiscal year goes on due to the expected growth in equity.

I have just a few more items. Our consolidated effective income tax rate improved to 36.5 percent in the quarter, and that was at 100 basis points better than the rate we expected. The rate improvement was primarily due to results we are achieving from recent year tax initiatives, including state income tax planning and our international operations. We anticipate that our income tax rate for all of fiscal 2004 could even continue to improve as the year goes on, perhaps to the low 36 percent range. Next, our first quarter net income rose to a record $24,958,000 or 55 cents a share. This 55 cents per share was 11 cents or 25 percent higher than the 44 cents we reported in the first-quarter last year. And I'll make just a few comments regarding earnings for our entire 2004 fiscal year.

As a result of our stronger than expected first-quarter results, and lower income tax rate, we are increasing our earnings guidance to a range of $2.17 to $2.20 per share. That represents an increase of 13 to 15 percent from the $1.92 per share we reported last year in fiscal 2003. This growth rate is consistent with our long-term strategy of growing our earnings in the low to mid teen range. As the year goes on there may be additional upside to this range of earnings due to stronger than expected same-store sales trends or from accretion from any future acquisitions.

In addition, second-quarter consolidated revenue is forecasted to be in the range of $460 to $465 million with a same-store sales expectation of 1 to 1.5 percent. Diluted earnings per share are expected to be in the range of 54 to 56 cents a share in our second-quarter. For a detailed summary of our guidance, please feel free to visit our corporate Web site. And I'll now provide you some information regarding our salon counts.

At the end of our first quarter, that was the end of September, we had a total of 9,707 salons and that was a net increase of 569 units over the number of salons we had a year ago at the end of the first-quarter of fiscal 2003. In today's press release you'll find a table that breaks out our salon counts for each of our salon divisions. For our entire 2004 fiscal year, we plan to build 500 to 575 new company-owned salons, and we plan to open at least 300 franchise units. In addition, our salon base continues to grow through our acquisition strategy. So that's it, with that Paul and I would be happy to answer any questions you have. So, operator, if you could step in and provide some instructions we'd appreciate that.

(OPERATOR INSTRUCTIONS) Mark Chekanow with Sidoti.

Is there any way you can transition the way you're buying products for Opal or in Europe to direct from the manufacturer as opposed to distributors?

In Europe it's virtually impossible, we're just not set up, we don't have a warehouse, and it doesn't make economic sense. We look at the numbers from time to time and at some point in time it might, but not now. In terms of Opal, they have a lot of secondary lines that we just don't want to carry in the warehouse yet. We're looking at that. But the amount of money involved is relatively insignificant, so it's not -- it really is not a material issue.

And then, speaking in October you sounded pretty optimistic about the way that's shaping up so far. Is there anything you can gather yet that we're seeing an improvement in the service comps in October so far?

We issue our October on November 7th, so I don't want to get more specific than I did get -- than I was in my speech, but they are somewhat stronger than September. But once again, this is a funny business. August was terrific and then September was okay, October is much stronger than September. But there has not been enough time that has gone by that would enable us to say comps should be normalized in the 2.5 to 3 percent range, that is not the case yet. As you know, we're pretty conservative.

Okay. And just one last thing. The inventory situation seems to be improving, what can you attribute that to?

As we've talked before, Mark, we are taking a more aggressive role in managing the growth of our inventories without affecting our overall retail business. And I think, as we've seen in the evidence, the inventories grew only $1 million over the past quarter, compare that to a year ago where inventories were up nearly $13 million for the quarter. We are controlling it better and, as you can also see from our product comps, we're not impacting the business. We continue to see that the (technical difficulty) inventories in the near-term will continue to be very modest.

Thanks.

Ellen Zigman (ph) with William Blair.

A couple of questions for you guys. First of all, can you -- I want to talk about product margin a little bit. Can you help me understand why the product margin at trade is lower? Is it a mix issue or are there other things there? And then also, I know you've been doing a lot with replenishment in that division which seems to have been going well for you, can you just comment on how you're progressing there and where you -- the timing for moving that to other divisions and why we are not maybe seeing more of that in your overall product margin?

Ellen, let me take a stab at that. Yes, trade is really a mix play. As we know, there's very little private-label merchandise that's sold. In recent months, one of the hot product categories in trade has been appliances -- curling irons, blow dryers, hair straighteners, etc. -- and that's a little bit lower margin merchandise. As we also know in Trade Secret -- well, in all of our divisions -- when we look at the cost of goods, that includes primarily it's going to be the cost of the product that we're selling as well as payroll that we pay to our associates. And with trade, we have a little bit higher payroll cost. For those reasons the product margins and trade is going to be a little bit lower than in our other divisions. So that's the reason for that.

As it relates to some of the initiatives that we've seen with our POS systems and our automatic replenishments with our JDA merchandising system in Trade Secret, yes, we've seen a lot of benefit and we focused initially on Trade Secret because over half of our annual product sales come out of that division. And they do behave more like a retailer, and we've seen some very good improvement in results out of Trade Secret. We are having discussions with our chief operating officers in our other divisions, but as Paul mentioned earlier, we are more conservative than aggressive, and I'm not anticipating any huge results from that in the near-term in our other divisions. But we'll continue to focus on it and try to seize any opportunities that do exist. One thing that we are doing in our other divisions through automation is planograms where we help our managers identify the product that we should be selling and how to display it, and that is having a benefit in our other divisions, but the automatic replenishment is something only time will tell.

Randy, why are you not moving it into other divisions? Is it because it's just too small of a business in the other divisions to really have the impact, or is it an execution, time constraint, what are the reasons for not moving forward since you are seeing success in trade?

A lot of it has been because of the focus in the past has been primarily on trade for the reasons that I gave you. And I'm not suggesting we aren't going to focus on it in the other divisions. But with the other divisions, product sales is not as significant to each division. And again, we have six corporate divisions. So when the other five divisions -- on a stand-alone basis it will not be as significant as it is in trade. And quite frankly, with trade we have retail associates that are focused solely on selling product in the trade environment. In the other divisions we have stylists, their main focus is to focus on customers and hair salon services. For that reason we just don't have as much of a retail focus in our other salon -- more traditional salon divisions.

And Randy had a key point. Those stylists really are not terribly interested in doing the accounts that are necessary to make replenishment work. And many at our stores have six, seven, eight, nine stylists and they're busy cutting hair, and it may very well be impractical to implement the trade replenishment system.

I see. Thanks. Also, with the integration of the two European businesses, can you just let us know what is done and what is still on the docket to do and the timeline as it progresses through the year? I know you commented on the percent of sales of the overall year or the basis point improvement, but what's the timeline?

In terms of the integration of the two operations, that's all done.

Okay, all right. And then why -- with the advertising down, can you just help us understand that a little bit more? Which division was that in specific, what kind impact do you think that may have had to some of your sales during the quarter?

Ellen, it's hard to say. I mean, I can tell you that in terms of our expenditures it cut across most divisions. And what impact did it have on the quarter? It really is hard to quantify the cost benefit of advertising and marketing expenditures. We're very pleased with the overall sales performance so I don't think it significantly impacted the quarter.

I was wondering if it was maybe you pulled a big campaign or something like that. It wasn't anything like that?

And that reduction, as Randy pointed out in his presentation, is not sustainable.

Right, I understand. And then finally and I'll let someone else go. Why were franchise product sales down? As you grow the franchise base does that mean that some of the franchisees either were not ordering as much to be conservative on inventories or were they going to distributors, or why would that be --?

A good portion of the reason is the fact that we had a significant number of franchise buybacks. In other words, franchisees bought a lot of product. Now they're company-owned sales.

Okay, thanks.

(OPERATOR INSTRUCTIONS) Ellen Zigman from William Blair.

I'll ask my follow-up now. Can you give us a sense of what's going on with service margins in the different divisions? I know you had some different initiatives to help control payroll or restructure payroll in some of the divisions, what's the current view there?

Ellen, I think some of the initiatives that we put in probably over the last 12 to 18 months are fully implemented. So in the near-term we're not expecting to see much change. The good news is, over half of every dollar -- generally speaking, over half of every dollar that this company brings in goes back out in terms of payroll and related benefits. Our operating people, our COOs, our salon directors in every one of our divisions focus virtually all of their time on payroll control, and we're very pleased with the payroll controls that currently exist in all of our divisions and the resulting gross margins.

So as a result, I think earlier I gave some guidance in terms of what we expect our overall product margins -- or I'm sorry, service margins to do for the balance of the year. We continue to see that they should continue to trend somewhere in the mid to high 43 percent range. We're not really looking that there should be a significant amount of upside. One thing that we do see, as always, is that as our mix changes, as our faster growing concepts, whether it's Supercuts, MasterCuts or Wal-Mart, they have a little bit higher service margin rates because we pay fixed cost payrolls generally in those divisions. That has a favorable effect on our overall combined service margin rate.

Thanks. And then one last question. With respect to the franchisee buybacks for Wal-Mart, should we be expecting more of those and, can you just give us a sense of the magnitude of how many potential stores you now will have access to as a company-owned salon versus a franchise salon as Wal-Mart opens stores? In other words, these territories that you basically acquired, how big do you think that -- do you have a sense of what the opportunity is there?

Yes. Conservatively we should be able to be adding about 180 SmartStyle company-owned stores. And the franchisees, we'll be adding 20, maybe 22 to 23 Cost Cutters.

And before the reacquisition, Paul, that may have been --.

May have been 70/30. I mean 170/30. And a lot depends on Wal-Mart stores obviously. If they ramp up to supercenter -- their supercenter growth rate, then our numbers will increase accordingly.

Thanks. Kevin has one question for you.

Just in terms of the inventory, I know you mentioned in the last call or a couple of calls ago that you'd start to provide a more detailed breakout of the composition of the inventory. I'm just wondered when that might come. And so, can we get the inventory turns excluding acquisitions for the quarter versus last year?

Kevin, maybe we should have a bit of an off-line discussion on that. I don't recall ever stating that we were going to provide anymore detail on our inventories. In fact, there's no intention to do that.

All right, thanks.

Adam Weiss (ph) with Chilton Investment Company.

You report your revenues by concept, and it looks like the Regis salon revenues were up 14 percent and your units were up to 7, but I think when you reported your comps, you said your comps were actually down at the Regis. I'm just trying to understand that. In fact the average unit volumes were up pretty healthy in the quarter but you said the comps were negative.

Adam, you're right. The overall division, the Regis division grew nearly 14 percent total revenue. Our same-store sales in the Regis division was off about 1 percent for the quarter. The reason for the overall gains was because we're including some of our acquired stores, whether that's the Opal concept, specifically Carlton (ph), the recent acquisition of Vidal Sassoon is also included in that, and those recent acquisitions obviously were not in the same quarter a year ago.

And those are higher revenue per unit?

Yes, significantly.

What were the Opals doing?

The Carlton business --

The Carlton business does about $800,000 to $900,000 a store. And we have 25 to 30 stores. And Sassoon will do a million and a half to $2 million a store. And we have 12 of those domestically and 12 in Europe.

Great. Thank you.

Thank you. If there are no further questions I will now turn the conference back to Paul for closing comments.

We had a heck of a quarter, thank you for your support and have a good day.

Ladies and gentlemen, if you wish to access to replay for this call you may do so by dialing 1-800-428-6051 with an ID number of 307-033. This concludes our conference for today, thank you all for participating and have a nice day. All parties may now disconnect.