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Sally Beauty earnings see uptick as cost-cutting measures kick in

Published
today May 2, 2019
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Despite declines in sales, Denton, Texas-based hair and beauty supply retailer Sally Beauty Holdings, Inc. reported improved second-quarter earnings on Wednesday thanks to cost-saving measures implemented as part of its ongoing transformation plan.


Sally Beauty successfully implemented effective cost-cutting measures in Q2 - Instagram: @sallybeauty

 
For the second quarter ended March 31, 2019, the company’s net sales totaled $945.9, down 3.0% from the $975.3 million reported in the prior-year period. Sally Beauty attributed much of the blame for this decline to the closure of 69 stores in the quarter. Consolidated same-store sales did, however, also see a slight decrease of 0.5%.
 
By segment, net sales at Sally Beauty Supply came to $565.6 million, representing a decrease of 2.5% from Q2 2018, while same-store sales slipped 0.3%. This was the segment most heavily hit by store closures, having lost 64 retail locations to finish the quarter with a total of 3,718.

In the company’s Beauty Systems Group segment, net sales fell 3.8% to $380.2 million, with same-store sales decreasing 0.9%.
 
Sally Beauty’s quarterly earnings, however, totaled $65.7 million, an increase of $4.4 million, or 7.1%, compared to the equivalent period in the previous year, while diluted earnings per share came to $0.54, up 10.2% from $0.49.
 
The company attributed this progress primarily to a reduction of around $6.8 million in selling, general and administrative expenses, as well as a $6.6 million gain received from the sale of its secondary HQ and fulfillment center in Texas, which completed in Q2.
 
Proceeds from the sale were also put towards funding part of Sally Beauty’s debt repurchase.
 
As it pushes forward with its transformation plan, the company also launched its new sallybeauty.com mobile-first e-commerce platform and enabled sales transactions on its newly remodeled Beauty Systems Group app over the course of the quarter.
 
Other initiatives successfully implemented by the company in Q2 include an initial roll-out of new point-of-sale systems for both Sally Beauty Supply and Beauty Systems Group, the launch of new exclusive and influencer-partner brands, such as Maria Nila and MoKnowsHair, and the build-out of new concept stores in Las Vegas.
 
“During the quarter, we made solid progress on our transformation plan as we completed the launch of Sally Beauty’s new mobile-first e-commerce platform, launched new brands, had success against our supply chain modernization plans and reduced our debt levels, all as promised,” commented Sally Beauty President and CEO Chris Brickman in a release.
 
In April, Sally Beauty also announced that it would be further bolstering its transformation efforts with the appointment of Mary Beth Edwards as group VP for global sourcing and the promotion of Heather Plutino, group VP of finance and treasurer, to the company’s senior leadership team.
 
In the second half of the year, the group intends to continue its transformation plan with the nationwide launch of the Sally Beauty integrated app, as well as new e-commerce and mobile capabilities for Beauty Systems Group. The company will also implement a new order management system and seek to build awareness around key brands.
 
Sally Beauty announced that it is maintaining its previously reported full-year guidance, with consolidated same-store sales expected to remain flat. 

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