Sally Beauty manages earnings rise despite disappointing sales
Denton, Texas-based professional beauty supply company Sally Beauty Holdings, Inc. has reported net earnings of $57.2 million for the first quarter ended December 31, 2020, reflecting a 7.5% year-over-year increase from $53.2 million, in spite of sales that came in under Wall Street estimates.
Quarterly net earnings per share were $0.50, up from $0.45 in the same period in the previous year.
Sales for the quarter decreased 4.5% year over year, from $980.2 million to $936.0 million, while same store sales fell 3.7%. Wall Street analysts had predicted that the company would report net sales of around $967.9 million.
The decline in Sally Beauty’s revenues was largely due to the Covid-19 pandemic, which led to temporary store closures in some international markets, restricted capacity in others, and salon shut-downs in California and parts of Canada. During the quarter, the company was also operating 43 fewer stores compared to the prior-year period.
Global e-commerce sales increased 48%, partially offsetting the decreases in brick-and-mortar sales.
The company also saw improvements in its consolidated gross margin, which was 50.3% in the quarter, representing an increase of 190 basis points compared to 48.4% in the prior-year period, thanks mainly to reduced promotional activity.
By segment, the company’s Sally Beauty Supply business saw its net sales decrease 3.8% to $547.7 million, while its operating earnings rose 28.2% year over year to $95.1 million. At Beauty Systems Group, net sales dropped 5.5% to $388.4 million, with operating earnings falling 22.2% to $48.6 million.
“Our teams executed well both operationally and financially in a particularly challenging topline environment,” said Sally Beauty president and CEO Chris Brickman in a release.
“Despite the disruption to sales from store closures and capacity restrictions globally and salon shut-downs in California and parts of Canada, we delivered strong gross margins above 50%, closely managed expenses and generated a 6% increase in adjusted diluted earnings per share,” he added.
Due to continued uncertainty surrounding the ongoing coronavirus crisis, Sally Beauty has not provided formal financial guidance for the second quarter or the full fiscal year.
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