Performance and Marketing Updates

Sweetwater -
We hit a record guest count this week of 210. We had 140 new guests. Sales have been pushing to the $3,000 a week so they are continuing to move forward. The rent is good there so it makes the expenses lower. With another marketing push we believe the store will be nearing break even. We are doing good with ticket averages (amount customer spends while getting a service).

All management has confirmed, we feel strongly that we should close the Otto location. It will take too long to get to profitability. It had a record of 151 people in the salon last week, but the ticket average is so hard there. It will probably do 165- 170 guest next week, but the sales are not enough because the ticket average is so poor. The area draws in a low income client base, which is fine except, they are not spending enough per visit to sustains the expenses of running the location. The volume that the location will need to do at this low ticket average is substantial. We feel it is in the best interest of the investment to close this location, sell the assets, redirect the rent liability to the other location and focus on Sweetwater really performing well. We anticipate that this plan will give us a strong buffer to make Sweetwater do extremely well, get the job count there and at a later date, if possible, open another salon from the profits of the Sweetwater location.


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