Sally Beauty Supply 2011 Annual Report Download - page 28

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Our purchasing and distribution system is designed to minimize the delivered cost of merchandise and
maximize the level of merchandise in-stock in stores. This distribution system also allows for monitoring of
delivery times and maintenance of appropriate inventory levels. Product deliveries are typically made to
our stores on a weekly basis. Each distribution center has a quality control department that monitors
products received from suppliers. We utilize proprietary software systems to provide computerized
warehouse locator and inventory support. Please see ‘‘Risk Factors—We are not certain that our ongoing
cost control plans will continue to be successful.’’
Management Information Systems
Our management information systems provide order processing, accounting and management information
for the marketing, distribution and store operations functions of our business. A significant portion of
these systems have been developed internally. The information gathered by the management information
systems supports automatic replenishment of in-store inventory and provides support for product purchase
decisions. Please see ‘‘Risk Factors—We may be adversely affected by any disruption in our information
technology systems.’’
Employees
In our domestic and foreign operations, we had approximately 24,615 employees as of September 30, 2011;
consisting of approximately 7,040 salaried, 4,935 hourly and 12,640 part-time employees. We had
approximately 22,900 employees as of September 30, 2010; consisting of approximately 6,730 salaried,
4,670 hourly and 11,500 part-time employees. Part-time employees are used to supplement schedules,
particularly in North America.
Certain subsidiaries in Mexico have collective bargaining agreements covering warehouse and store
personnel which expire at various times over the next several years. We believe that we have good
relationships with our employees worldwide.
Management
For information concerning our directors and executive officers, please see ‘‘Directors and Executive
Officers of the Registrant’’ in Item 10 of this Annual Report.
Regulation
We are subject to a wide variety of laws and regulations, which historically have not had a material effect
on our business. For example, in the U.S., most of the products sold and the content and methods of
advertising and marketing utilized are regulated by a host of federal agencies, including, in each case, one
or more of the following: the Food and Drug Administration, or FDA, the Federal Trade Commission, or
FTC, and the Consumer Products Safety Commission. The transportation and disposal of many of our
products are also subject to federal regulation. State and local agencies regulate many aspects of our
business. In marketplaces outside of the U.S., regulation is also comprehensive and focused upon product
labeling and safety issues.
As of September 30, 2011, Sally Beauty Supply supplied 25 and BSG supplied 156 franchised stores located
in the U.S., Mexico and certain countries in Europe. As a result of these franchisor-franchisee
relationships, we are subject to regulation when offering and selling franchises in the applicable countries.
The applicable laws and regulations affect our business practices, as franchisor, in a number of ways,
including restrictions placed upon the offering, renewal, termination and disapproval of assignment of
franchises. To date, these laws and regulations have not had a material effect upon our operations.
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