Sally Beauty Supply 2013 Annual Report Download - page 22

assurance that the time and resources our management will need to devote to these upgrades, service
outages or delays due to the installation of any new or upgraded technology (and customer issues
therewith), or the impact on the reliability of our data from any new or upgraded technology will not have
a material adverse effect on our financial reporting, business, financial condition or results of operations.
Please see ‘‘Risk Factors—We may be adversely affected by any disruption in our information technology
systems.’’
Business Segments, Geographic Area Information and Seasonality
We operate two business segments: (i) Sally Beauty Supply, an open-line and exclusive-label distributor of
professional beauty supplies offering professional beauty supplies to both retail consumers and salon
professionals primarily in North America, Europe, Puerto Rico and South America, and (ii) BSG,
including its franchise-based business Armstrong McCall, a full-service beauty supply distributor offering
professional brands directly to salons and salon professionals through our own sales force and
professional-only stores, many in exclusive geographical territories, in North America, Puerto Rico, the
United Kingdom and certain other European countries. BSG operates stores under the CosmoProf service
mark. BSG also franchises Armstrong McCall professional beauty supply outlets in the southern and
southwest portions of the U.S. and in Mexico, and supplies sub-distributors in Europe. Sally Beauty Supply
accounted for approximately 62% and BSG accounted for approximately 38% of the Company’s
consolidated net sales for each of the years ended September 30, 2013, 2012 and 2011.
Financial information about business segments and geographic area information is incorporated herein by
reference to the ‘‘Business Segments and Geographic Area Information,’’ Note 18 of the ‘‘Notes to
Consolidated Financial Statements’’ in ‘‘Item 8—Financial Statements and Supplementary Data’’
contained elsewhere in this Annual Report.
Neither the sales nor the product assortment for Sally Beauty Supply or BSG are generally seasonal in
nature.
Sally Beauty Supply
We believe Sally Beauty Supply is the largest open-line distributor of professional beauty supplies in the
U.S. based on store count. As of September 30, 2013, Sally Beauty Supply operated 3,403 company-
operated retail stores, 2,710 of which are located in the U.S. (with the remaining 693 company-operated
retail stores located in Canada, Mexico, Chile, the United Kingdom, Ireland, Belgium, France, Germany,
the Netherlands and Spain). Sally Beauty Supply also supplied 21 franchised stores located in the United
Kingdom and certain other European countries. Our Sally Beauty Supply stores carry an extensive
selection of professional beauty supplies for both retail customers and salon professionals, with between
6,000 and 10,000 stock keeping units, or SKUs, of beauty products across product categories including hair
color, hair care, skin and nail care, beauty sundries and electrical appliances. Sally Beauty Supply stores
carry leading third-party brands such as Clairol↧, Revlon↧ and Conair↧, as well as an extensive selection of
exclusive-label merchandise. We believe that Sally Beauty Supply has differentiated itself from its
competitors through its customer value proposition, attractive pricing, extensive selection of leading third-
party branded and exclusive-label professional beauty products, an extensive selection of ethnic products,
knowledgeable sales associates and convenient store locations.
Store Design and Operations
Sally Beauty Supply stores are designed to create an appealing shopping environment that embraces the
retail consumer and salon professional and highlights its extensive product offering. In the U.S. and
Canada, our Sally Beauty Supply stores average approximately 1,700 square feet in size, are located
primarily in strip shopping centers and generally follow a consistent format, allowing customers familiarity
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