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

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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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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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