Sally Beauty Q4 Earnings Miss by a Penny, Revenues In Line
Sally Beauty Holdings Inc. (SBH), the specialty retailer of professional beauty supplies, posted fourth-quarter fiscal 2014 adjusted earnings of 39 cents a share that missed the Zacks Consensus Estimate by a penny. The bottom line, however, jumped 2.6% from the prior-year quarter attributable to top-line growth and share repurchase activity.
Sally Beauty Holdings, Inc - Quarterly EPS (:BNRI) | FindTheBest
Consolidated net sales increased 4.2% year over year to $944.3 million, reflecting comparable-store sales growth and opening of new stores. The quarter was favorably impacted by an improvement in the Sally business and a sturdy performance by Beauty Systems Group. Total net sales came almost in line with the Zacks Consensus Estimate. Comparable-store sales increased 2.6% during the quarter versus 0.4% in the prior-year period. Management now projects comparable-store sales growth of slightly over 3% during fiscal 2015.
Gross profit for the quarter increased 4% to $467.5 million but gross margin contracted 10 basis points to 49.5%. The company now anticipates gross margin to improve 20–30 basis points in fiscal 2015.
Adjusted EBITDA grew 0.2% to $151.4 million, whereas adjusted EBITDA margin contracted 70 basis points to 16%.
Segment Details
Sally Beauty Supply sales went up 4.5% to $581.3 million, supported by net new store openings, a 2.1% increase in comparable-store sales and favorable foreign currency translations. Segment operating margin contracted 70 basis points to 18.6%.
Sales at Beauty Systems Group improved 3.6% to $363 million attributable to comparable-store sales growth of 3.8% and net new store openings. Segment operating margin expanded 90 basis points to 14.9%.
Store Count
In the trailing 12-month period, net 139 Sally Beauty Supply outlets were opened taking the count to 3,563 (company-operated outlets 3,544 and franchised stores 19) by the end of the reported quarter. In the same period, 20 Beauty Systems Group outlets were opened resulting in 1,265 locations (company-operated outlets 1,103 and franchised stores 162) at the end of the quarter.
Management now foresees organic store growth in the band of 3% to 4% in fiscal 2015.
Financials
Sally Beauty ended the quarter with cash and cash equivalents of $106.6 million and total debt, excluding capital leases, of $1,807.5 million.
During fiscal 2014, the company incurred capital expenditures of $76.8 million. Sally Beauty now expects capital expenditures in the range of $95 million to $100 million during fiscal 2015.
During the quarter, the company bought back 1.2 million shares aggregating $31.6 million under the $700 million share buyback program. In the fiscal year, the company repurchased 12.6 million shares aggregating $333.3 million.
On Aug 20, the company’s Board of Directors authorized a share buyback program of $1 billion to be exhausted by Sep 30, 2017. The new repurchase authorization overrides the $700 million existing program.
Zacks Rank
Sally Beauty currently carries a Zacks Rank #3 (Hold). Other stocks that warrant a look in the retail space include ULTA Salon, Cosmetics & Fragrance, Inc. (ULTA), Bebe Stores, Inc. (BEBE) and Zumiez, Inc. (ZUMZ). All these stocks carry a Zacks Rank #2 (Buy).
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