May 4, 2018
2 minutes
Sally Beauty Q2 sales up, hires new CFO
May 4, 2018
Sally Beauty continued to struggle in its second quarter in terms of revenue growth. The company announced on Thursday net sales of $975.3 million, an increase of just 0.9 percent compared to the same period prior-year.
Same-store sales decreased 1.4 percent. The company said the quarter was still impacted by the hurricanes that disrupted operations in Puerto Rico in the fourth quarter of fiscal 2017.
President and CEO, Chris Brickman, also noted that traffic trends in Sally Beauty stores in the U.S. continued to be a challenge.
“A slight increase in consolidated net sales was offset by a modest decline in gross margin and higher selling, general and administrative expenses due primarily to unfavorable foreign exchange translation and operating expenses from our recent Canadian acquisition. However, the benefits of U.S. tax reform, lower interest expense and a lower share count helped drive strong double digit growth in both reported and adjusted diluted earnings per share.”
“In addition, our operations continue to generate substantial operating free cash flow, with an increase of 22.3 percent over the prior year, to $59.1 million,” he explained.
The Texas-based beauty-supplies distributor reported $0.49 earnings per share for the quarter, up 22.5 percent.
Reported net earnings in the second quarter were $61.4 million, up $4.4 million, or 7.7 percent, from the prior year.
During the quarter, Sally Beauty also launched two new color lines - Wella ColorCharm Paints and Arctic Fox – as it increases its focus on its hair color and hair care lines. What’s more, it completed testing of a new Sally loyalty program, which it plans to role out before the end of the fiscal year.
In April, the company announced a cost reduction strategy including headcount reductions at its corporate HQ, in order to streamline its business and ensure long-term growth.
Total costs related to the 2018 restructuring plan are estimated to be around $28 million to $30 million, most of which will be recorded in the current fiscal year.
Amid the restructuring, on Thursday, the company also announced the appointment of Aaron E. Alt as CFO.
For fiscal year 2018, the company now expects full year consolidated same store sales to decline by approximately one percent.
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