TEXAS: Sally Beauty Holdings Inc. SBH, +10.26% said its earnings fell 9% in the latest quarter on higher costs that masked improved sales.
Shares rose 6% in early trading to $23.46 but are down 24% year to date.
Chief Executive Chris Brickman said Thursday that Sally Beauty implemented growth initiatives in recent quarters that it expects will largely offset anticipated cost challenges and allow for steady profit growth in the fiscal year ending next September.
Mr. Brickman said the company’s pipeline of sales-growth initiatives includes packaging upgrades, a reset of haircare and color categories and the introduction of local television and radio advertising, moves that aim to differentiate Sally Beauty from competitors and create a more modern image.
For the period ended Sept. 30, Sally Beauty reported a profit of $56.2 million, or 36 cents a share, down from $61.8 million, or 39 cents a share, a year earlier. Excluding one-time items, such as expenses related to the restructuring of the company’s operations in Germany and a data-security breach, per-share earnings were 38 cents.
Revenue increased 2.1% to $964.2 million on the addition of new stores as well as growth at established locations.
Analysts polled by Thomson Reuters expected per-share profit of 39 cents and revenue of $964 million.
Gross margin fell to 49.3% from 49.5%. Overhead costs increased 21%. Sales at established stores rose 3.5%, compared with growth of 2.6% in the year-earlier period.
Sally Beauty in May said its payment card systems were breached, though the company declined to detail the scope of the intrusion. The Texas-based retailer previously said it was investigating reports of unusual activity involving payment cards at some stores. That came a year after disclosing a breach that affected more than 25,000 customer records.
