Despite the current slowdown in the retail sector, Sally Beauty Holdings Inc. posted fourth-quarter comparable-store sales growth of 4.3 percent on revenues that increased 5.5 percent to $639.7 million from $606.1 million in the year-ago period.
Net earnings for the quarter ended Sept. 30 came in at $16.9 million, or 9 cents a diluted share, from $30.7 million a year ago, when Sally was still part of Alberto-Culver Co. Sally's quarterly profits beat Wall Street analysts' expectations of 6 cents a share, according to Yahoo Finance.
"Historically, we have not followed retail patterns very closely," Gary Winterhalter, Sally's president and chief executive officer, told analysts during a conference call Thursday morning. "In our experience, [comp-store sales] were good even in a quarter when general retail was starting a down trend."
He noted that Sally does experience seasonal business in the hair appliance category, when hair dryers and curling irons are given as gifts, and he added the category could be pressured "if overall retail gets very soft this season."
Fourth-quarter comp-store sales for Sally's Beauty Systems Group business, which includes 874 BSG stores, jumped 10.1 percent, helping to offset $30 million in revenues lost when Sally lost exclusive distribution rights to L'Oréal brands earlier in the fiscal year.
Due in part to the loss of the L'Oréal business, BSG sales declined by 7.2 percent to $229.1 million from $246.8 million a year ago. However, margins at BSG continue to improve following the loss of the L'Oréal business and are expected to return to 2006 levels of 9 percent, according to Sally.
In certain geographic regions, BSG began distributing brands including Goldwell, KMS, Paul Mitchell, Schwarzkopf, Wella, Sebastian, Graham Webb, Joico, Iso and Tigi. Additionally, a facilities restructuring plan has begun at BSG and the firm expects the strategy could yield $10 million in cost savings in the next fiscal year.
Comp-store sales for the firm's Sally Beauty Supply unit, which comprises 2,694 stores, rose by 2.4 percent during the fourth quarter. Sales at the chain were also up, by 14.3 percent, to $410.7 million, from $359.3 million in the prior year. Sally Beauty Supply revenues were helped by the company's acquisition earlier in the fiscal year of U.K. firm Salon Services, which added $34.6 million in quarterly sales.Winterhalter said he believes the U.S. market could support 3,000 Sally Beauty Supply stores and foresees expanding the business in Europe, South America, Canada and Mexico.
"I'm optimistic about the overall momentum in our business," he remarked.
Full-year profits at Sally Beauty Holdings were $44.5 million, or 24 cents a share, compared with $110.2 million a year ago. Annual sales reached $2.51 billion, a 5.9 percent increase from $2.37 billion last year.
From overseeing America’s fastest-growing speciality retailers to codifying cool, WWD talked to the women who are leading the way for the future of beauty. Check out our Instagram Stories to see how these women built today and are creating tomorrow. (📸: @hannah_khymych) #wwdbeauty
For @laperlalingerie's spring 2018 show, the brand chose to host their event at @thevenetianmacao. With Chinese megastars @bingbing_fan and @hubing in attendance, La Perla debuted a rock ‘n’ roll-inspired collection. The show marked the start of Sands Macao Fashion Week, which runs from October 19 to 24 — the city’s first such event. Pictured here are models backstage with glimmering eyes. #wwdfashion (📷: Cheuk-Yin To)
Trending for spring 2018: top stitch design. Gone are the days of stitch just for seams — designers are using the once-minimal detail to create strong decorative elements. (📷: Paola Testa; Styled by @andrew_shang) #wwdfashion
@tradesy is turning the concept of a showroom upside down with its new space in Santa Monica. Here, the company plans to hold events, art exhibits and a showcase rare fashion pieces like this Louis Vuitton boxing set. Get all the details on Tradesy’s first showroom on WWD.com. #wwdnews
Spotted last night at the @erdem x @hm launch event: Kate Bosworth, Rashida Jones, Kirsten Dunst and Selma Blair. The party, which took place in LA, also marked the opening of their pop-up shop. “I was interested in creating a collection that wasn’t in any way disposable. It was about pieces you’d create and keep forever, things that have a permanence to it,” designer Erdem Moralioglu said. #wwdeye (📷: Katie Jones)
Renee Zellweger in yellow in 2001 and again in 2017. Chosen as one of the 12 @pantone Leading Spring Colors (and dubbed “Meadowlark”), it only makes sense that the bright hue stands the test of time and is making a resurgence this season, seen already on stars like @blakelively and @gigihadid. (📷: Donato Sardello & @rexfeatures) #wwdfashion #tbt
Dior’s 70th anniversary celebration continues with a new exhibition at the Royal Ontario Museum in Toronto. “Christian Dior,” which is scheduled to run through March 18, takes a look at the founders tenure from 1947 to 1057 and feature 40 designs. Pictured here is an evening gown from the Ailée, fall 1948-49 haute couture collection. #wwdfashion (📷: Brian Boyle)