Sally Beauty Holdings’ disappointing – but not discouraging – Q3 results

By Deanna Utroske contact

- Last updated on GMT

Sally Beauty Holdings’ disappointing – but not discouraging – Q3 results

Related tags: Gross profit margin, Generally accepted accounting principles

At least that’s how company president & CEO Christian Brickman put it in his statement to the press on Thursday, which also indicates gross profits are up slightly and includes a revision of previous expectations for fiscal year 2015.

Elaborating on his remark that, “We are disappointed in the Q3 results for our Sally business, but not discouraged,” ​Brickman admits, “It is taking longer than we expected for traffic from the non-Beauty Club Card customer to recover, but we still have great confidence that we are moving in the right direction.”

Brickman stepped into the CEO role in February, as reported  by Cosmetics Design​, and at the time declared that “the Company’s priority will remain focused on the execution of our strategic initiatives to drive long-term shareholder value.”

Unauthorized access
The theft of data from some 25,000 Sally Beauty customers in March of 2014 set the company back. Brickman is hopeful that he can move the business forward in spite of the lingering traffic loss. “As we enter Q4, we believe the disruption caused by the recent data security incident is now behind us,” ​he says.

Measures to improve data security are ongoing: “We intend to further enhance our systems and culture to ensure the security of our networks and customer data, and our Sally team continues to be laser focused on driving sales progression,” ​explains Brickman.

Brighter future
Sally Beauty has several initiatives in the works to reach consumers and rally the business.  “We will invest in national TV for the Sally brand through our sponsorship of Project Runway which will begin to air early August,” ​Brickman says in his statement.

Beyond that campaign the company expects “to complete the reset of our cash-wrap area, upgrade our channel leading eyelash studio, and significantly improve the look and shopability of the cosmetics section in the stores. Finally, we plan to continue our store refresh program and refine our recently launched CRM model.”

Fiscal facts
Those changes are meant to improve the numbers. Sally Beauty Holdings reports $967.9 m in consolidated net sales for the quarter, up 2% from the same quarter last year but foreign currency exchange rates had a $26.2m impact.

And gross profits are up by 2.1% for the quarter to $481.3m for Sally. Nonetheless, the company had anticipated a consolidated gross profit margin expansion of 20 to 30 basis points over 2014 but has now shifted its outlook: “Consolidated gross profit margin for fiscal year 2015 is now expected to be flat when compared to fiscal year 2014 consolidated gross profit margin of 49.6%.”

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