Sally Beauty Gains In Q3

Sally Beauty posted a rise in third quarter net earnings and sales, led by its professional beauty business.

In its third quarter ended June 30, Sally Beauty Holdings recorded net earnings of $67.9 million, or 46 cents per diluted share, versus net earnings of $62.5 million, or 39 cents per diluted per share, in the quarter a year prior.

Adjusted net earnings were $68.8 million, or 47 cents per diluted per share, versus adjusted net earnings of $65.2 million, 41 cents per diluted share, in the 2015 quarter.

Consolidated net sales were $998.2 million up 3.1% from the year-earlier period. Operating earnings were $134.1 million as compared with $130.8 million in the 2015 quarter.

In the third quarter, Sally Beauty Supply posted sales of $597.1 million, up 1.4%, with growth coming from net new store openings and comparable store sales growth of 1.3%. The impact of foreign currency exchange on sales was negative $7.4 million, or 1.3%. Sales at the company’s beauty systems group, which targets professional customers exclusively, gained 5.7% in the quarter year over year, according to the company, reaching $401.1 million. The company attributed sales growth to a 5.4% comp gain, additional revenue from the sales consultant business and new store openings partially offset by the unfavorable impact of foreign currency exchange, which was $1.8 million, or 0.5%.

“In the fiscal 2016 third quarter, we delivered solid consolidated results including gross margin expansion and mid-teens earnings per share growth,” said Chris Brickman, Sally Beauty CEO. “At a segment level, the beauty systems group had another terrific quarter with same store sales growth of 5.4%. However, our Sally North American business did not meet our expectations. Sally’s retail traffic is clearly taking longer to return to historical levels than we anticipated. We do believe there were a couple of tactical marketing changes in the quarter that negatively impacted traffic growth, and we have moved quickly to address these issues. Going forward, we remain optimistic that Sally can get back to steady, sequential sales improvement. During the quarter, we also completed several of our Sally initiatives such as a brush category reset, the color education center rollout and the completion of owned-brand repackaging.”

Through the Sally Beauty Supply and beauty systems group businesses, the company sells and distributes through over 5,000 stores.