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Sally Beauty (SBH) Q1 Earnings & Revenues Miss Estimates - Analyst Blog

Sally Beauty Holdings Inc. (SBH), specialty retailer of professional beauty supplies, posted first-quarter fiscal 2015 earnings per share of 35 cents that missed the Zacks Consensus Estimate of 38 cents. However, it remained flat compared with the year-ago quarter.

Sally Beauty Holdings Inc. - Earnings Surprise | FindTheBest

 

Consolidated net sales increased 2.6% from the prior-year quarter to $964.5 million, benefitting from comparable-store sales growth of 2.3% and opening of new stores. However, sales results were unfavorably impacted by foreign currency fluctuations. Net sales also fell short of the Zacks Consensus Estimate of $975 million.

Gross profit for the quarter increased 2.9% to $473.8 million, whereas gross margin improved 10 basis points to 49.1%. Adjusted EBITDA, including stock based compensation expense, fell 2.8% to $137.1 million from the year-ago quarter.

Segment Details

Sally Beauty Supply sales went up 2.3% to $586.5 million, supported by new store openings and a 1.6% increase in comparable-store sales. However, the impact of unfavorable foreign currency translations on sales was 1.6% or $9.3 million. Segment operating margin contracted 80 basis points to 17.3%.

Sales at Beauty Systems Group improved 3% to $377.9 million, attributable to comparable-store sales growth of 3.9% and new store openings. Segment operating margin expanded 10 basis points to 15%.

Store Count
 
The company opened net 161 Sally Beauty Supply outlets since first-quarter fiscal 2014 taking the total store count to 3,605 (company-operated outlets 3,586 and franchised stores 19) by the end of the reported quarter. In the same period, 26 Beauty Systems Group outlets were opened resulting in 1,275 locations (company-operated outlets 1,109 and franchised stores 166) at the end of the quarter.

Financials

Sally Beauty ended the quarter with cash and cash equivalents of $190.7 million and total debt, excluding capital leases, of $1,807.3 million.

During first-quarter fiscal 2015, the company incurred capital expenditures of $19.4 million. Sally Beauty now projects capital expenditures in the range of $95 million to $100 million during fiscal 2015, excluding acquisitions.

During the quarter, the company bought back 243,000 shares aggregating $7.25 million, and still has approximately $992.7 million worth of share repurchase authorization remaining.

On Aug 20, 2014, the company’s board of directors authorized a share buyback program of $1 billion to be exhausted by Sep 30, 2017.

Zacks Rank

Sally Beauty currently carries a Zacks Rank #3 (Hold). Better-ranked stocks in the retail space include ULTA Salon, Cosmetics & Fragrance, Inc. (ULTA), The Michaels Companies, Inc. (MIK) and CST Brands, Inc. (CST). All these stocks carry a Zacks Rank #2 (Buy).
 


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