Streamlining continues to pay dividends for Sally Beauty

By Simon Pitman

- Last updated on GMT

Related tags Revenue

Salon hair care provider Sally Beauty has reported that its net income more than doubled for the third quarter on the back of strong increases in both revenue and same-store sales.

Consolidated sales grew by 6.6 percent to reach $676.8m, compared to the same period last year, while same store sales grew by 3.4 percent – the latter figures indicating the sales for stores that were already opened, as opposed to brand new retail outlets.

The company did add that new stores had contributed to the consolidated sales growth during the third quarter, along with the acquisition of Pro-Duo, the Flemish beauty supplier it bought in May of this year for €19.3m ($28.75m).

The company added a total of 62 new stores to its portfolio during the quarter, 40 of which were accounted for by new European stores attributable to the Pro-Duo acquisition.

New stores boost figures

Dividing those sales up by division, the company’s Sally Beauty Supply grew net sales by 6.1 per cent to $428.0m, whereas its Beauty Systems Group increased sales by 7.6 percent during the quarter to reach $248.9m.

Net earning grew by 118 percent, reaching $29.4m, compared to a figure of $13.4m in the corresponding quarter last year, whereas the adjusted figure was $24.5m, taking into consideration a $4.9m charge for interest credit on debts.

“We continue to execute on our initiatives set forth a the beginning of the 2008 fiscal year and deliver strong results despite the challenging business environment,”​ said Gary Winterhalter, CEO.

“We believe that our operating results are further evidence that our business is fairly recession resistant,”​ he added.

Improvement follows spin-off

The improved results come after a difficult transitional period following its spin-off by the Alberto-Culver company last year, in a deal estimated to be worth $2.6bn.

Sally Beauty incurred costs from the spin-off, most notably in interest expenses, which stood at $36.8m for the quarter. Furthermore, selling, general and administrative costs rose by 9 percent, largely as a result of the split from Alberto-Culver.

The company warned against making comparisons with last year's figures because of the gravity of the changes that had taken place in the interim.

In addition to the split with Alberto-Culver, Sally Beauty lost the right to distribute L'Oreal USA's professional beauty care products in December 2006.

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