NEW YORK — The map of the U.S. salon industry was dramatically redrawn this week with the stroke of a pen.
Alberto-Culver Co.’s Beauty Systems Group reached an agreement Wednesday to acquire West Coast Beauty Supply, the Northern California-based full service professional beauty products distributor, snatching up arguably one of the last formidable players in the professional beauty distribution industry.
The deal ends Beauty Systems’ 15-year quest to bring the West Coast distributor under its umbrella. According to market observers, Beauty Systems — a company that sells professional beauty care brands to salon owners, salon professionals and franchisees — went head to head with Clearwater, Fla.-based Beauty Alliance, the industry’s second-largest distributor, for the opportunity to pocket West Coast Beauty Supply, the industry’s richest prize. West Coast Beauty generated close to $140 million in annual sales.
Beauty Alliance executives did not return calls for comment.
The deal is expected to bump up Beauty Systems’ yearly sales to more than $800 million, also giving it a presence in about 80 percent of the U.S.’s 250,000 salons, up from 65 percent. Depending upon the exact closing date, which is expected to be before the end of the calendar year, the transaction should contribute $140 million to Alberto-Culver’s fiscal 2004 top line-sales results, and be slightly accretive to earnings per share.
No details regarding a price paid for the company have been revealed.
The deal brings Beauty Systems into a much more prominent position on the West Coast. The company, which expects to end 2003 with $580 million in sales, will now have a greater profile in California, Washington, Oregon and Arizona. Its number of sales consultants will grow to more than 1,225 and its number of stores will jump to 650 in the U.S., Canada and Mexico due to the acquisition.
The professional hair care industry — apparently conditioned to the decade-long consolidation taking place in both the supplier and distributor areas of the business —doesn’t seem fazed by the recent deal. David Craggs, president of L’Oréal USA’s Professional Products Division, the world’s leading salon hair care supplier, said “BSG is a very big partner, and we see [the acquisition] as a very constructive move. For the hairdresser I don’t think the acquisition makes any difference. West Coast is a very solid distributor that gave very good customer service and BSG is even more in that vein.”
A spokesperson for Toni & Guy said executives there don’t see the deal impacting their business either.
Craig Bernick, Alberto-Culver’s manager for corporate development and investor relations, said his company has had its eye on West Coast Beauty Supply for more than a decade. The company’s founder and owner, Wayne Clark, recently decided to sell West Coast because he was looking to retire and didn’t have a “next generation” to run the company, Bernick said. Clark, however, will continue to run Cricket, a division not included in the sale, which makes hair appliances.
Bernick described West Coast Beauty as a “very healthy business,” which he expects will add one penny in profit per share for the second, third and fourth quarters of 2004. Culver’s first quarter begins Oct. 1.
West Coast Beauty’s sales and corporate team in Benicia, Calif., will remain in place, Bernick added.
Alberto-Culver’s Beauty Systems division, which is based in Melrose Park, Ill., has more than doubled sales since 2000, fueled mainly by acquisitions. Its most notable recent conquests include Monarch Beauty Supply of Canada and Armstrong McCall of Austin, Texas.
In addition to Beauty Systems, Alberto-Culver manufactures, distributes and markets personal care products including Alberto VO5, St. Ives and Tresemme. Its Pro-Line International unit is the second largest ethnic hair care marketer, behind L’Oréal, and its Sally Beauty Company is the world’s number one marketer of professional beauty care products through domestic and international-based Sally stores.