By and  on May 9, 2008

Sally Beauty Holdings Inc. had an active Thursday, as it announced a 12.7 percent rise in second-quarter profits, a new partnership with Paris Hilton for hair extensions and the acquisition of a 40-store beauty supply chain in Belgium called Pro-Duo, N.V.

The Paris Hilton deal calls for the retailer to produce and exclusively market Paris Hilton hair extensions, called Dream Catchers Clipin-Go, at its stores in the U.S. and Canada.

"We believe this strategy will attract a younger customer to shop our Sally stores," Gary Winterhalter, president and chief executive officer of Sally Beauty Holdings Inc., told Wall Street analysts during an earnings call Thursday morning.

Preceding the earnings call, Sally held a press conference in New York to unveil the union with Hilton, who also has a fragrance licensing deal with Parlux Fragrances Inc.

"I've been wearing hair extensions for years and have tried other products that didn't work," said Hilton. "When I started using Dream Catchers, I started using the best quality and styles. I'm always coming up with new ideas because I love coming up with fun hairstyles."

Mike Spinozzi, president of Sally Beauty Supply, trumpeted the partnering of Hilton, with her inescapable media profile, and Sally Beauty. "It's a powerful combination. She's business-savvy and very creative."

Available in 10 shades, Clipin-Go by Paris Hilton was designed to be an "affordable yet chic" line priced at $79.99. Although the extensions will initially only be available in an 18-inch length, the company plans to do variations of the look with different colors and styles.

Second-quarter profits at Sally came in at $12.4 million, or 7 cents a diluted share, from $11 million, or 6 cents, during the same period a year ago, meeting analysts' estimates for the current period. Quarterly revenues rose 5.6 percent to $643.3 million, from $609.3 million in the same period a year ago.

Winterhalter said on the earnings call that the acquisition of Pro-Duo N.V., a deal that was valued at 19.3 million euros, or $29.7 million at current exchange, was completed Wednesday.

"We see this as a critical step in our Sally Beauty Supply international growth strategy," he said. Sally stated that Pro-Duo had revenues of about $31 million in the fiscal year ended June 30 of last year.

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