Sally Beauty Supply 2013 Annual Report Download - page 54

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ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following section discusses management’s view of the financial condition as of September 30, 2013 and
2012, and the results of operations and cash flows for the three fiscal years in the period ended
September 30, 2013, of Sally Beauty. This section should be read in conjunction with the audited
consolidated financial statements of Sally Beauty and the related notes included elsewhere in this Annual
Report. This Management’s Discussion and Analysis of Financial Condition and Results of Operations
section may contain forward-looking statements. Please see ‘‘Cautionary Notice Regarding Forward-
Looking Statements’’ for a discussion of the uncertainties, risks and assumptions associated with these
forward-looking statements that could cause results to differ materially from those reflected in such
forward-looking statements.
Highlights of the Fiscal Year Ended September 30, 2013:
• Our consolidated net sales from company-operated stores that have been open for 14 months or
longer, which we refer to as same store sales, increased 0.8% for the fiscal year ended
September 30, 2013, compared to the fiscal year ended September 30, 2012;
• Our consolidated net sales for the fiscal year ended September 30, 2013 increased by $98.6 million,
or 2.8%, to $3,622.2 million compared to the fiscal year ended September 30, 2012. For the fiscal
year ended September 30, 2013, changes in foreign currency exchange rates did not have a material
impact on our consolidated net sales;
• Our consolidated gross profit for the fiscal year ended September 30, 2013 increased by
$52.0 million, or 3.0%, to $1,795.3 million compared to the fiscal year ended September 30, 2012.
As a percentage of net sales, gross profit increased to 49.6% for the fiscal year ended September 30,
2013, compared to 49.5% for the fiscal year ended September 30, 2012;
• Our consolidated operating earnings for the fiscal year ended September 30, 2013 increased by
$21.0 million, or 4.2%, to $520.4 million compared to the fiscal year ended September 30, 2012. As
a percentage of net sales, operating earnings increased to 14.4% for the fiscal year ended
September 30, 2013, compared to 14.2% for the fiscal year ended September 30, 2012;
• Our consolidated net earnings increased by $28.1 million, or 12.1%, to $261.2 million compared to
the fiscal year ended September 30, 2012. As a percentage of net sales, net earnings increased by 60
basis points to 7.2% for the fiscal year ended September 30, 2013, compared to 6.6% for the fiscal
year ended September 30, 2012;
• Sally Beauty Supply and BSG opened or acquired 119 and 53 net new stores, respectively, during
the fiscal year ended September 30, 2013, excluding franchised stores;
• Cash provided by operations increased by $12.9 million, or 4.3%, to $310.5 million for the fiscal year
ended September 30, 2013, compared to $297.6 million for the fiscal year ended September 30,
2012;
• In March 2013, our Board of Directors approved a new share repurchase program authorizing us to
repurchase up to $700.0 million of our common stock. During the fiscal year ended September 30,
2013, we repurchased and retired approximately 18.9 million shares of our common stock under
share repurchase programs approved by our Board of Directors, including the repurchase program
approved in March 2013, at an aggregate cost of $509.7 million; and
• In May 2013, we acquired certain assets and business operations of Essential Salon Products, Inc.
(‘‘Essential Salon’’), a professional-only distributor of beauty products operating in the northeastern
region of the United States, for approximately $15.7 million, subject to certain adjustments.
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