Strong Q2 at Sally Beauty

“We had an exceptional second quarter across both business segments with record same store sales of 9.1% over positive comps of 6.0% in the second quarter of last year,” stated Gary Winterhalter, president and CEO. “Strong sales growth of 10.9% led to significant SG&A leverage and operating margin expansion of 130 and 160 basis points, respectively. We reduced our long-term debt by $100 million, lowering our debt ratios consistent with our capital structure objectives. As we head into the second half of the fiscal year we will continue to evaluate our options for cash deployment that generate the highest return for our shareholders.”

For fiscal Q2, consolidated net sales were $889.3 million, an increase of 10.9% from the fiscal 2011 second quarter. This fiscal 2012 second quarter sales increase is attributed to same store sales growth, the addition of new stores and acquisitions, the company said. Consolidated same store sales growth in the fiscal 2012 second quarter was 9.1% compared to 6.0% in the fiscal 2011 second quarter. Key drivers of same store sales growth include increased customer traffic and higher average ticket in both business segments.

Consolidated gross profit for the fiscal 2012 second quarter was $436.8 million, an increase of 11.5% over gross profit of $391.8 million for the fiscal 2011 second quarter. Gross profit as a percentage of sales was 49.1%, a 20 basis point improvement from the fiscal 2011 second quarter and a 30 basis point improvement from the fiscal 2012 first quarter.

Second quarter results for Sally Beauty Supply segment included sales of $554.0 million, up 12.9% from $490.8 million in the fiscal 2011 second quarter. The negative impact of unfavorable foreign currency exchange on net sales was $3.8 million, or 0.8% of sales. Sales from same stores, net new stores and acquisitions contributed 8.9%, 2.7% and 1.5%, respectively, to overall sales growth. Same store sales grew 9.3% year over year versus 6.2% in the fiscal 2011 second quarter. Segment earnings of $111.3 million, up 18.5% from $93.9 million in the fiscal 2011 second quarter.Segment operating margins increased 100 basis points to 20.1% of sales from 19.1% in the fiscal 2011 second quarter.

Second quarter results for its Beauty Systems Group included a sales gain of 7.8% to $335.3 million, up from $311.0 million in the fiscal 2011 second quarter. The negative impact of unfavorable foreign currency exchange on net sales was $0.7 million, or 0.2% of sales. Sales from same stores, net new stores and the non-store business contributed 5.4%, 1.5% and 0.8%, respectively, to overall sales growth.Same store sales grew 8.7% year over year versus 5.6% in the fiscal 2011 second quarter, the company said. Segment earnings of $45.6 million, up 36.0% from $33.5 million in the fiscal 2011 second quarter.Segment operating margins increased by 280 basis points to 13.6% of sales from 10.8% in the fiscal 2011 second quarter, the company said.