Sally Beauty Supply 2011 Annual Report Download - page 51

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ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following section discusses management’s view of the financial condition as of September 30, 2011 and
2010, and the results of operations and cash flows for the fiscal years ended September 30, 2011, 2010 and
2009, of Sally Beauty. This section should be read in conjunction with the audited consolidated financial
statements of Sally Beauty and the related notes included elsewhere in this Annual Report. This
Management’s Discussion and Analysis of Financial Condition and Results of Operations section contains
forward-looking statements. Please see ‘‘Cautionary Notice Regarding Forward-Looking Statements’’ for a
discussion of the uncertainties, risks and assumptions associated with these forward-looking statements
that could cause actual results to differ materially from those reflected in such forward-looking statements.
Highlights of the Fiscal Year Ended September 30, 2011:
• Our consolidated sales from company-operated stores that have been open for at least 14 months as
of the last day of a month, which we refer to as same store sales, increased 6.1% for the fiscal year
ended September 30, 2011;
• Our consolidated net sales for the fiscal year ended September 30, 2011 increased by $353.0 million,
or 12.1%, to $3,269.1 million compared to the fiscal year ended September 30, 2010. Net sales for
the fiscal year ended September 30, 2011 reflect approximately $23.3 million, or 0.8%, in net
positive impact from changes in foreign currency exchange rates;
• Our consolidated gross profit for the fiscal year ended September 30, 2011 increased by
$190.2 million, or 13.5%, to $1,594.6 million compared to the fiscal year ended September 30, 2010.
As a percentage of net sales, gross profit increased to 48.8% for the fiscal year ended September 30,
2011, compared to 48.2% for the fiscal year ended September 30, 2010;
• Our consolidated operating earnings for the fiscal year ended September 30, 2011 increased by
$107.5 million, or 31.5%, to $448.5 million compared to the fiscal year ended September 30, 2010.
As a percentage of net sales, operating earnings increased to 13.7% for the fiscal year ended
September 30, 2011, compared to 11.7% for the fiscal year ended September 30, 2010;
• For the fiscal year ended September 30, 2011, unallocated corporate expenses increased by 3.0% to
$81.6 million compared to the fiscal year ended September 30, 2010. As a percentage of net sales,
unallocated corporate expenses decreased to 2.5% for the fiscal year ended September 30, 2011,
compared to 2.7% for the fiscal year ended September 30, 2010;
• Sally Beauty Supply and BSG each opened or acquired 127 net new stores during the fiscal year
ended September 30, 2011, excluding franchised stores;
• Cash provided by operations increased by $74.6 million, or 34.3%, to $291.8 million for the fiscal
year ended September 30, 2011, compared to $217.2 million for the fiscal year ended September 30,
2010;
• In October 2010, we acquired Aerial Company, Inc. (‘‘Aerial’’), an 82-store professional-only
distributor of beauty products operating in 11 states in the midwestern United States, for
approximately $81.8 million; and
• During fiscal year ended September 30, 2011, we made optional prepayments on our senior term
loan B facility in the aggregate amount of $147.0 million.
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