In a bid to boost shareholder’s value, Sally Beauty Holdings Inc. (SBH), a leading distributor and retailer of professional beauty products, declared a new share repurchase program worth $300 million of its common stock starting from October 18, 2012.
The share repurchase program is spread over 18-month period. The program not only enhances shareholders’ value but also elevates the market value of the company’s outstanding shares.
Sally Beauty Holdings plans to fund the share repurchase program through a combination of cash in hand, future cash flow from operations and borrowings under its revolving credit facility. Previously, in May 7, 2012, it announced a share repurchase program worth of $200 million.
SBH’s continuous announcements of share buyback programs reflect its stable cash position and its ability to generate healthy cash flow. Moreover, management affirms that the company uses its excess cash to return value to shareholders’ as well as to invest in growth opportunities.
Sally Beauty Holdings recently posted third-quarter 2012 financial results with quarterly earnings of 38 cents per share, reflecting 26.7% year-over-year increase from 30 cents posted in the comparable prior-year quarter. This also came ahead of the Zacks Consensus Estimate by a penny. Net consolidated revenue increased 6% to $887.0 million mainly due 5.2% rise in comparable store sales; however, it missed the Zacks Consensus Estimate of $896.0 million.
At the end of the third-quarter 2012, cash and cash equivalents came in at $54.0 million and working capital increased to $449.5 million. Capital expenditures for the period of nine months totaled $44.3 million and are projected to be in the range of $65 - $70 million for the fiscal 2012.
Currently Sally Beauty Holdings which competes with Walgreen Co. (WAG) carries a Zacks #3 Rank for the next 1-3 months implying short-term Hold rating.
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