‘Challenging Quarter’ at Sally Beauty

Sally Beauty Holdings, Inc. posted financial results for its fiscal 2018 first quarter ended Dec. 31, 2017. Consolidated net sales slipped slightly at 0.5% to $995.0 million in the first quarter.

“Consistent with our expectations, this was a challenging quarter in terms of revenue growth. Business in the first quarter was impacted by a continuation of disappointing traffic trends in our U.S. Sally Beauty stores, an additional day of store closures versus the prior year for our Beauty Systems Group CosmoProf stores due to the holiday calendar and the residual impact of Hurricane Maria in Puerto Rico. However, we were pleased to have exceeded our expectations for both reported and adjusted diluted earnings per share, even after excluding the net benefits from U.S. Tax Reform,” said Chris Brickman, president and chief executive officer. “Modest declines in consolidated net sales and gross margin were offset by benefits from our 2017 Restructuring Plan, tight control of discretionary expenses and lower interest expense. We also continued to strategically return cash to shareholders via stock repurchases totaling approximately $65 million in the quarter.

“Our focus remains on initiatives and opportunities to drive profitable revenue growth. Related to that, we expanded the Canadian footprint of our Beauty Systems Group segment in the quarter by acquiring a profitable distributor in the province of Quebec. Additionally, we accelerated investments in our e-commerce fulfillment capabilities to allow us to offer two-day delivery to more than 90% of U.S. households – a service level we attained last month, well ahead of the original schedule. In addition to continuing to test and refine the new Sally loyalty program, we successfully launched col-lab in Sally stores in the U.S. and Canada, a new exclusive cosmetics line. Beyond this, we are designing and testing a number of in-store initiatives that seek to reinforce what Sally is best known for amongst its core consumer base – hair color and care. And, finally, we successfully completed several of the initiatives contemplated by our 2018 Restructuring Plan, the primary goal of which is to leverage the full scale of our consolidated European business and deliver additional cost savings.

“We believe that these strategic investments, combined with the strength and stability of our large and growing BSG distribution business and the on-going benefits from U.S. Tax Reform, will keep us on the path to long-term earnings growth,” Brickman concluded.