Sally Beauty wobbles at the end of a solid year

By Guy Montague-Jones

- Last updated on GMT

Related tags Generally accepted accounting principles

Sally Beauty Holdings has reported solid financial results for the fiscal year although profits failed to match the estimates of analysts.

The retailer and distributor of professional beauty supplies posted a 5.3 percent increase in sales taking the yearly turnover figure to $2.51bn.

Sales growth slows

In the last quarter of the year ending September 30, sales growth was slightly lower than in earlier periods at 4.1 percent.

The lower sales towards the end of the year combined with higher costs to bring operating earnings down 2.7 percent for the fourth quarter to $70.94m.

Moving down the income sheet, net profit came to $21.5m for the quarter or 12 cents a share compared with $16.9m or 9 cents a share last year.

Below analyst expectations

Although this represents a significant improvement on last year, the figures were below analyst expectations, which on average predicted net profit of 15 cents a share, according to Reuters Estimates.

The full year profit figures told an altogether more positive story with operating profits up 23.8 percent to $282.9m and net profits climbing 74.4 percent to $77.58m.

Commenting on the results, Sally Beauty CEO Gary Winterhalter said: “We are pleased with the progress we made towards our strategic goals to grow the business and increase profits, while maintaining strong cash flow.

“And although we are not recession proof, our history of resiliency in a down economy, combined with our strong management team, gives me confidence we will have another successful year in 2009.”

Sally Beauty was spun off Alberto Culver in November 2006 because the parent company wanted to channel efforts on its consumer brands.

The Texas-based company initially suffered in 2007 from higher costs associated with the split from Alberto Culver.Selling, general and administrative costs and interest expense were both hit putting downward pressure on profits.

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