Sally Beauty Supply 2011 Annual Report Download - page 25

marketplaces, both organically and through strategic acquisitions. Key elements of our growth strategy are
to:
Increase Sales Productivity of Our Stores
We intend to grow same store sales by focusing on improving our merchandise mix and introducing new
products. In addition, we plan to tailor our marketing, advertising and promotions to attract new customers
and increase sales with existing customers. We plan to continue to enhance our customer loyalty programs,
which allow us to collect point-of-sale customer data and increase our understanding of customers’ needs.
Our exclusive-label products are competitive with leading third-party branded merchandise, draw traffic to
our stores and increase customer loyalty.
Expand Our Store Base
During the past five fiscal years, Sally Beauty Supply and BSG have opened an aggregate of 487 and 181
net new stores, respectively, excluding the effect of acquisitions. Because of the limited initial capital
outlay, rapid payback, and attractive return on capital, we intend to continue to expand our store base. In
the fiscal year 2011, we opened 126 and 39 Sally Beauty Supply stores and BSG stores, respectively,
excluding the effect of acquisitions. We believe there are growth opportunities for additional stores in
North America, Europe and Central and South America. We expect new store openings in existing and
new areas to be an important aspect of our future growth opportunities, and intend to continue our annual
organic store growth between 4% and 5% of our total stores for the foreseeable future.
Grow Internationally
International sales represent 21% of Sally Beauty Supply’s net sales and we believe there is a significant
opportunity for future growth in certain international geographic areas. As of September 30, 2011, we
operated 679 international company-owned stores and 55 international franchise stores across nine
countries outside the United States: Canada, the United Kingdom, Ireland, Belgium, France, Germany,
Spain, Chile and Mexico. We believe our platform provides us with the foundation to continue to expand
internationally. In particular, we are currently focused on growing our business in Europe and Central and
South America.
Increase Operating Efficiency and Profitability
We believe there are opportunities to increase the profitability of operations by growing our exclusive-label
brands, improving sourcing, shifting customer mix, continuing our cost-cutting initiatives, particularly at
BSG, and by further expanding our internet channel. We continue to develop and promote our higher
margin exclusive-label products and increase exclusive product sales, which increases our gross margins
and operating results. Over the past few years, we have undertaken a full review of our merchandise
procurement strategy. This initiative is intended to identify lower-cost alternative sources of supply in
certain product categories from countries with lower manufacturing costs. We continue to focus on
changing our customer mix by increasing the percentage of retail customers within our stores at Sally
Beauty Supply. At BSG, we have completed numerous projects, including a re-branding initiative that
repositioned the vast majority of our North American company-operated stores under a common name
and store identity, CosmoProf, which we believe has improved brand consistency, saved on advertising and
promotional costs and allowed for a more focused marketing strategy. Recently, we completed a
$22.0 million capital spending program to consolidate warehouses and reduce administrative expenses
related to BSG’s distribution network.
We also offer between 5,000 and 8,000 SKUs of our Sally Beauty Supply products for sale through our
website (www.sallybeauty.com) and have recently begun to offer between 10,000 and 12,000 SKUs of our
BSG products for sale principally through our websites (www.cosmoprofbeauty.com and
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