Sally Beauty Supply 2013 Annual Report Download - page 26

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selling professional beauty products, these sales consultants offer in-salon training for professionals and
owners in areas such as new styles, techniques and business practices. An important component of sales
consultants’ compensation is sales commissions. BSG’s commission system is designed to drive sales, as
well as focus consultants on selling products that are best suited to individual salons and salon
professionals.
We believe that our emphasis on recruitment, training, and sales-based compensation results in a sales
force that distinguishes itself from other full-service/exclusive-channel distributors and the employment of
sales consultants is an effective way to serve salons and salon professionals, particularly those located far
away from a BSG store.
The following table sets forth the approximate percentage of BSG sales attributable by distribution
channel:
Fiscal Year Ended
September 30,
2013 2012 2011
Company-operated retail stores ...................... 64.7% 64.3% 62.9%
Professional distributor sales consultants (full-service) ...... 26.0% 26.3% 27.4%
Franchise stores .................................. 9.3% 9.4% 9.7%
Total ........................................ 100.0% 100.0% 100.0%
Merchandise
BSG stores carry an extensive selection of third-party branded products, ranging between 5,000 and 10,000
SKUs of beauty products, including hair color and care, skin and nail care, beauty sundries and electrical
appliances and other beauty items. 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 an extensive selection of
branded merchandise is critical to maintaining relationships with our professional customers.
The following table sets forth the approximate percentage of BSG’s sales attributable by product category:
Fiscal Year Ended
September 30,
2013 2012 2011
Hair care ...................................... 35.8% 36.4% 37.0%
Hair color ...................................... 30.0% 29.8% 29.6%
Promotional items(a) .............................. 12.0% 12.0% 12.9%
Skin and nail care ................................ 10.2% 10.3% 9.7%
Electrical appliances .............................. 5.3% 4.7% 4.3%
Other beauty items ............................... 6.7% 6.8% 6.5%
Total ........................................ 100.0% 100.0% 100.0%
(a) Promotional items consist of sales from other categories that are sold on a value-priced basis.
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