Sally Beauty Supply 2011 Annual Report Download - page 23

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Store Locations
BSG stores are primarily located in secondary strip shopping centers. Although BSG stores are located in
visible and convenient locations, salon professionals are generally less sensitive about store location than
Sally Beauty Supply customers.
The following table provides a history of BSG’s store count (including franchised stores) during the last
five fiscal years:
Fiscal Year Ended September 30,
2011 2010 2009 2008 2007
Stores open at beginning of period .......... 1,027 991 929 874 828
Net store openings during period ........... 39 36 16 44 46
Stores acquired during period(a) ........... 85 — 46 11 —
Stores open at end of period .............. 1,151 1,027 991 929 874
(a) Stores acquired in the fiscal year 2011 include 82 stores owned by Aerial prior to the
Company’s acquisition of Aerial in October 2010. Stores acquired in the fiscal year 2009
include 43 stores owned by Schoeneman prior to the Company’s acquisition of Schoeneman
in September 2009.
Competitive Strengths
We believe the following competitive strengths differentiate us from our competitors and contribute to our
success:
The Largest Professional Beauty Supply Distributor in the U.S. with Multi-Channel Platform
We believe that Sally Beauty Supply and BSG together comprise the largest distributor of professional
beauty products in the U.S. by store count. Our leading channel positions and multi-channel platform
afford us several advantages, including strong positioning with suppliers, the ability to better service the
highly fragmented beauty supply marketplace, economies of scale and the ability to capitalize on the
ongoing consolidation in our sector. Through our multi-channel platform, we are able to generate and
grow revenues across broad, diversified geographies, and customer segments using varying product
assortments. In the U.S. and Puerto Rico, we offer up to 8,000 and 10,000 SKUs in Sally Beauty Supply (in
our stores and online) and BSG stores, respectively, to a broad potential customer base that includes retail
consumers, salons and barbershops in the U.S.
Differentiated Customer Value Proposition
We believe that our stores have a competitive advantage over those of our competitors due to our stores’
convenient location, broad selection of professional beauty products (including leading third-party branded
and exclusive-label merchandise), high levels of in-stock merchandise, knowledgeable salespeople and
competitive pricing. Our merchandise mix includes a comprehensive ethnic product selection, which is
tailored by store based on market demographics and category performance. We believe that the wide
selection of these products at our stores further differentiates Sally Beauty Supply from its competitors. In
addition, as discussed above, Sally Beauty Supply also offers a customer loyalty program called the Beauty
Club, whereby members receive special, member discounts on products and are eligible for Beauty Club
e-mail newsletters and exclusive direct mail flyers with additional promotional offerings, beauty tips and
new product information for a nominal annual membership fee. Our BSG professional distributor sales
consultants benefit from their customers having access to the BSG store systems as customers have the
ability to pick up the products they need between sales visits from professional distributor sales
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