Sally Beauty Supply 2011 Annual Report Download - page 69

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sales for Sally Beauty Supply for the fiscal year ended September 30, 2010, are inclusive of approximately
$4.5 million in positive impact from changes in foreign currency exchange rates.
Beauty Systems Group. Net sales for BSG increased by $140.5 million, or 14.9%, for the fiscal year ended
September 30, 2010, compared to the fiscal year ended September 30, 2009. Company-operated stores that
have been open for at least 14 months contributed an increase of approximately $51.8 million, or 5.5%,
sales from stores that have been open for less than 14 months contributed an increase of approximately
$6.3 million, or 0.7%, and sales from businesses acquired in the preceding 12 months contributed
approximately $80.9 million, or 8.6%, more to net sales for the fiscal year ended September 30, 2010,
compared to the fiscal year ended September 30, 2009. Other sales channels (including sales through our
distributor sales consultants and our franchise-based businesses), in the aggregate, experienced a minor
increase in sales compared to the fiscal year ended September 30, 2009. Net sales for BSG for the fiscal
year ended September 30, 2010, are inclusive of approximately $12.7 million in positive impact from
changes in foreign currency exchange rates, primarily in connection with our Canadian operations.
Gross Profit
Consolidated gross profit increased by $161.1 million, or 13.0%, for the fiscal year ended September 30,
2010, compared to the fiscal year ended September 30, 2009, principally due to higher sales volume and
improved gross margins in both business segments as more fully described below.
Sally Beauty Supply. Sally Beauty Supply’s gross profit increased by $97.6 million, or 11.1%, for the fiscal
year ended September 30, 2010, compared to the fiscal year ended September 30, 2009, principally as a
result of higher sales volume and improved gross margins. Sally Beauty Supply’s gross profit as a
percentage of net sales increased to 53.2% for the fiscal year ended September 30, 2010, compared to
51.8% for the fiscal year ended September 30, 2009. This increase was the result of a shift in product and
customer mix (including a year-over-year increase in sales of exclusive-label and other higher-margin
products), continued benefits from low-cost sourcing initiatives and overall margin improvements in
certain of our Sally Beauty Supply international businesses. This increase also reflects a $2.7 million
positive impact from changes in foreign currency exchange rates.
Beauty Systems Group. BSG’s gross profit increased by $63.4 million, or 17.4%, for the fiscal year ended
September 30, 2010, compared to the fiscal year ended September 30, 2009, principally as a result of higher
sales volume and improved gross margins. BSG’s gross profit as a percentage of net sales increased to
39.6% for the fiscal year ended September 30, 2010, compared to 38.7% for the fiscal year ended
September 30, 2009. This increase was principally the result of a favorable change in the sales and product
mix across the business, previously anticipated savings realized from the recently completed warehouse
optimization program and synergies from businesses acquired during the last 12 months. This increase also
reflects a $5.5 million positive impact from changes in foreign currency exchange rates.
Selling, General and Administrative Expenses
Consolidated selling, general and administrative expenses increased by $112.9 million, or 12.6%, to
$1,012.3 million for the fiscal year ended September 30, 2010, compared to $899.4 million for the fiscal
year ended September 30, 2009. This increase was attributable to incremental expenses (including
employee compensation, rent and other occupancy-related expenses) resulting from stores opened and
from businesses acquired in the preceding 12 months (including an increase of 145 stores, or 3.7%, over
the fiscal year 2009), as well as higher share-based compensation expense of $4.2 million, higher
advertising expenses in the Sally Beauty Supply segment of $7.1 million and acquisition-related expenses of
$0.7 million. Please see ‘‘Recent Accounting Pronouncements’’ below for more information about the
Company’s treatment of acquisition-related expenses. Selling, general and administrative expenses, as a
percentage of net sales, were 34.7% for the fiscal year ended September 30, 2010, compared to 34.1% for
the fiscal year ended September 30, 2009.
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