Sally Beauty sales slipped in the quarter ended Dec. 31, which the retailer attributed to a shorter holiday season.
The beauty retailer’s net sales dipped about 1 percent in the quarter, to $980.2 million. Net earnings dropped 19 percent year-over-year, to $53.2 million. The company attributed that dip to fewer sales, gross margin contraction from “technology issues” and increased wage and marketing expenses.
“Although we made significant progress on our transformation program during the first quarter, we fell short of both our top-line and bottom-line goals,” said Sally president and chief executive officer Chris Brickman. “I would highlight two key factors that contributed to the shortfall. First, traffic declined at both Sally Beauty Supply and specialty retail in general, resulting from the shortened holiday season. Second, implementation-related technology disruptions led to product pricing issues, the misapplication and unintended increase of promotional discounts, and a resulting disruption of our planned marketing activities during the quarter.”
“As we enter the second quarter, we believe we have addressed the most critical of the technology challenges we faced during the first quarter and we have already taken aggressive management steps to improve financial performance,” Brickman continued.
Sally is in the midst of a turnaround that has the retailer focusing more on the hair category and modernizing technology and digital efforts.
Jane Hali & Associates LLC, an investment research firm, said they are long-term positive on Sally. “We continue to note improvements across product, digital and the in-store experience. [Sally Beauty] is clearly differentiating from the beauty competition as they focus mostly on the hair category. [Sally] has also been concentrating on private label, which is positive for gross margin.”
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