Sally Beauty Supply 2011 Annual Report Download - page 31

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Our comparable store sales and quarterly financial performance may fluctuate for a variety of reasons.
Our comparable store sales and quarterly results of operations have fluctuated in the past, and we expect
them to continue to fluctuate in the future. A variety of factors affect our comparable store sales and
quarterly financial performance, including:
• changes in our merchandising strategy or mix;
• the performance of our new stores;
• our ability to increase sales and meet forecasted levels of profitability at our existing stores;
• the effectiveness of our inventory management;
• the timing and concentration of new store openings, including additional human resource
requirements and related pre-opening and other start-up costs;
• levels of pre-opening expenses associated with new stores;
• the effect of our integration of acquired businesses and stores over time;
• the varying cost and profitability of new stores opened in the U.S. and in foreign countries;
• a portion of a typical new store’s sales (or sales we make over the internet channel) coming from
customers who previously shopped at other existing stores;
• expenditures on our distribution system;
• the timing and effectiveness of our marketing activities, particularly our Sally Beauty Club and
ProCard promotions;
• seasonal fluctuations due to weather conditions;
• the level of sales made through our internet channels;
• actions by our existing or new competitors;
• fluctuations over time in the cost to us of products we sell; and
• worldwide economic conditions and, in particular, the retail sales environment in the U.S.
Accordingly, our results for any one fiscal quarter are not necessarily indicative of the results to be
expected for any other quarter, and comparable store sales for any particular future period may not
continue to increase at the same rates as we have recently experienced and may even decrease, which could
have a material adverse effect on our business, financial condition and results of operations.
We depend upon manufacturers who may be unable to provide products of adequate quality or who may be unwilling
to continue to supply products to us.
We do not manufacture any products we sell, and instead purchase our products from recognized brand
manufacturers and private label fillers. We depend on a limited number of manufacturers for a significant
percentage of the products we sell. During the fiscal year 2011, our five largest suppliers were Procter &
Gamble Co., or P&G, the Professional Products Division of L’Oreal USA S/D, Inc., or L’Oreal, Conair
Corporation, John Paul Mitchell Systems and Shiseido Cosmetics (America) Limited and accounted for
approximately 42% of our consolidated merchandise purchases. In addition, BSG’s largest supplier,
L’Oreal, represented approximately 16% of BSG’s merchandise purchases during the fiscal year 2011.
Since we purchase products from many manufacturers and fillers under at-will contracts and contracts
which can be terminated without cause upon 90 days notice or less, or which expire without express rights
of renewal, manufacturers and fillers could discontinue sales to us immediately or upon short notice. Some
of our contracts with manufacturers may be terminated if we fail to meet specified minimum purchase
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