Sally Beauty Supply 2007 Annual Report Download - page 14

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and salon professionals. We believe our emphasis on recruitment, training, and sales-based compensation results in a sales force that distinguishes itself from
other full-service/exclusive-channel distributors.
The following table sets forth the approximate percentage of BSG sales attributable by channel:
Year Ended
September 30,
2007
2006
Company-owned retail stores 53.4% 47.5%
Professional distributor sales consultants 31.2% 37.2%
Franchise stores 15.4% 15.3%
Total 100.0% 100.0%
Merchandise
BSG stores carry a broad selection of branded beauty supplies, ranging between 2,700 and 9,800 SKUs of beauty products, including hair care products, nail
care, appliances and other beauty items from leading third-party brands. Some products are available in bulk packaging for higher volume salon needs. Through
BSG's information systems, each store's product performance is actively monitored, allowing maintenance of an optimal merchandise mix. Additionally, BSG's
information systems track and automatically replenish inventory levels on a weekly basis, enabling BSG to maintain high levels of product in stock. Although
BSG positions itself to be competitive on price, its primary focus is to provide a comprehensive selection of branded products to the salon professional. Certain
BSG products are sold under exclusive arrangements with suppliers, whereby BSG is designated the sole distributor for a specific brand name within certain
geographic territories. We believe that carrying a broad selection of branded merchandise is critical to maintaining relationships with our valued professional
customers.
The following table sets forth the approximate percentage of sales attributable by merchandise category:
Year Ended
September 30, 2007
Hair care 39.5%
Hair color 22.5%
Promotional items(a) 12.7%
Skin and nail care 8.7%
Electrical appliances 7.5%
Brushes, cutlery and accessories 3.8%
Salon equipment 2.3%
Other beauty items 2.0%
Ethnic products 1.0%
Total 100.0%
(a)
Promotional items consists of sales from other categories that are sold on a discounted basis
Marketing and Advertising
BSG's marketing program is designed to promote its extensive selection of brand name products at competitive prices. BSG distributes at its stores and mails to
its salon and salon professional customers multi-page color flyers that highlight promotional products. Some BSG stores also host monthly
manufacturer-sponsored classes for customers. These classes are held at BSG stores and led by manufacturer-employed educators. Salon professionals, after
paying a small fee to attend, are educated on
7
Source: Sally Beauty Holding, 10-K, November 29, 2007