Beauty & Balance

With Focus on Hair, Sally Beauty Sales Dip, But Earnings Jump

Sally Beauty sales dipped slightly in the fiscal year and fourth quarter, but earnings were up.
For the full fiscal year, net sales were down 0.1 percent, to $3.9 billion, and net earnings were up 20 percent, to $258 million.
The company posted a 0.8 percent dip in net sales in the quarter, to $966 million, from $974.2 million in the prior-year period. Net earnings increased 54.5 percent year-over-year to $55.2 million, from $35.7 million.
Sally continues to hone its focus on the hair category in both its Sally Beauty Supply and Beauty Systems Group segments. Sally Beauty launched box color in the U.S., and Beauty Systems Group signed distribution agreements with new hair color and care brands. Chris Brickman, Sally's chief executive officer, said the moves are meant to "enhance our differentiated categories of hair color and care."
"We are playing to win by refocusing our business around our differentiated core of hair color and care, improving our execution of basic retail fundamentals and advancing our digital commerce capabilities," Brickman said. "We are continuing to drive costs out of the business, which is enabling investment in our transformation."
At Sally Beauty, in addition to box color, the business rolled out private-label brand Ion — a line of tools — to the stores. Pravana and vegan hair brand Maria Nila also launched in the quarter. Brickman said on the company's call with Wall Street analysts that the business had also launched new brands, including Procter & Gamble's My Black is Beautiful and Vernon Francois.
Net sales at Sally Beauty were down 1.3 percent in the quarter, to $576.6 million. The segment has 21 fewer stores from the prior-year period, and now has 3,761 stores.
Beauty Systems Group posted a 0.1 percent decrease in net sales, to $389.4 million. Store count in that group was up by 27, bringing it to 1,395. That jump was driven by new CosmoProf stores and the acquisition of H. Chalut Ltée, a Canadian retailer.
While hair is the company's priority, the company is delving more into other categories, like makeup. Sally just launched with Maybelline, Brickman said on the call.
"We are not, and do not, intend to be a cosmetics destination," Brickman said, but added that those items could help build baskets.
Sally is also ramping up digital, and saw a 27 percent increase in e-commerce sales in the quarter. The company has added AR technology that allows customers to see themselves with different hair colors.
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