Sally Beauty Supply 2007 Annual Report Download - page 13

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The following table provides a history of Sally Beauty Supply store openings since the beginning of fiscal year 2003:
Year Ended September 30,
2007
2006
2005
2004
2003
Stores open at beginning of period 2,511 2,419 2,355 2,272 2,177
Net store openings during period 83 92 62 83 95
Stores acquired during period 100 — 2 — —
Stores open at end of period 2,694 2,511 2,419 2,355 2,272
Beauty Systems Group
We believe that BSG is the largest full-service distributor of professional beauty supplies in the U.S. As of September 30, 2007, BSG operated 699
company-owned stores, supplied 175 franchised stores and had a sales force of approximately 1,100 professional distributor sales consultants selling exclusively
to salons and salon professionals in 47 U.S. states and portions of Canada, Mexico and certain European countries.
Store Design and Operations
BSG stores are designed to create a professional shopping environment that embraces the salon professional and highlights its extensive product offering.
Company-owned BSG stores average 2,700 square feet and are located primarily in secondary strip shopping centers. BSG store layouts are designed to provide
optimal variety and options to the salon professional. Stores are segmented into distinctive areas arranged by product type with certain areas dedicated to leading
third-party brands; such as Paul Mitchell, Wella, Sebastian, Goldwell and TIGI. The selection of these brands varies by territory.
Professional Distributor Sales Consultants
BSG has a network of approximately 1,100 professional distributor sales consultants, which exclusively serve salons and salon professionals. The following
table sets forth the number of consultants in the BSG network since the beginning of fiscal year 2003:
Year Ended September 30,
2007
2006
2005
2004
2003
Professional distributor sales consultants 1,067 1,192 1,244 1,167 989
The decrease in distributor sales consultants in fiscal year 2007 is in response to the loss of L'Oreal related sales discussed below under "Competition." BSG's
sales force was reduced and the remaining affected distributor sales consultants were offered certain compensation related incentives to stay with us as BSG
seeks to replace lost L'Oreal sales.
In order to provide a knowledgeable consultant team, BSG actively recruits professional cosmetologists and individuals with sales experience, as we believe that
new consultants with either broad knowledge about the products or direct sales experience will be more successful.
BSG provides training to new consultants beginning with a one-week training program, followed by a continuing program of media-based training, delivered
through audio, video and web-based e-learning. The program is designed to develop product knowledge as well as techniques on how best to serve salon
professionals. In addition to selling professional beauty products, these sales consultants offer in-store training for professionals and owners in areas such as new
styles, techniques and business practices.
An important component of consultants' compensation is sales commissions. BSG's commission system is designed to drive sales and focus consultants on
selling products that are best suited to individual salons
6
Source: Sally Beauty Holding, 10-K, November 29, 2007