Sally Beauty Q1 Earnings Slip, New CEO Steps Up

For the first quarter, Sally Beauty Holdings, Inc., posted net earnings of $54.9 million, a 5.3% decrease from its fiscal 2014 period net earnings of $58 million, with diluted earnings per share of 35 cents coming in flat year over year. The company also announced that president and COO Chris Brickman succeeded Gary Winterhalter as CEO effective on February 1.

Winterhalter will continue to serve the company as executive chairman of the board of directors. The changes were consistent with the company’s previously announced executive transition plan, noted Sally Beauty.

Consolidated net sales were $964.5 million, up 2.6% from the fiscal 2014 first quarter. The sales increase in this year’s first quarter is attributed to comparable store sales growth and the addition of new stores, the company reported. Consolidated comp growth in the first quarter was 2.3%, Sally Beauty stated. The unfavorable effect of foreign currency exchange rate fluctuation in the fiscal 2015 first quarter was $12 million, or 1.2% of sales, the company added.

“As we continue to invest in and drive improvements in support of our core business, we anticipated first quarter results might fall below our full year expectations and that subsequent quarters would show steady improvement as our strategic initiatives were fully implemented,” Brickman said. “Consistent with these expectations, our consolidated same store sales for the fiscal 2015 first quarter were 2.3% and sales growth was 2.6%, which includes a 120 basis point unfavorable impact due to foreign currency exchange. Consolidated gross margin expanded 10 basis points driven by both our business segments. SG&A expense growth was higher this quarter than we anticipate going forward due to the final quarter of incremental health care expenses and investments made to lay the foundation for our strategic initiatives. As a result, we do not believe this quarter’s deleverage is indicative of how the remainder of the year will progress.”