Sally Beauty Supply 2013 Annual Report Download - page 8

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Gary G. Winterhalter
Chairman, President and
Chief Executive Officer
CONSOLIDATED SALES AND
GROSS PROFIT MARGIN
BEAUTY SYSTEMS GROUP
SALLY BEAUTY SUPPLY
SALES (IN MILLIONS)
GROSS PROFIT MARGIN
SEGMENT OPERATING EARNINGS AND
CONSOLIDATED OPERATING MARGIN
BEAUTY SYSTEMS GROUP
SALLY BEAUTY SUPPLY
EARNINGS (IN THOUSANDS)
CONSOLIDATED OPERATING PROFIT MARGIN
PAGE 4
Regarding marketing for Sally Beauty, Beauty Club Card
memberships increased 10 percent to reach over 7.4 million,
which represents half of our retail sales. Beauty Club Card
customers consistently have higher average sales and shop
more frequently than non-members. Additionally, we believe
the return to our targeted marketing initiative in FY 2014 will
lead to improved retail trac and a higher average ticket.
BEAUTY SYSTEMS GROUP
Our Beauty Systems Group segment saw a rise in net sales
of 5.1 percent over FY 2012, reaching $1.4 billion. This strong
performance can be attributed to a 4.2 percent growth in
same-store sales and net new store openings. Our gross
margin, driven by favorable customer and product mix,
reached an annual record of 41.1 percent, up 10 basis points
from FY 2012. By leveraging our eciencies and tightly
managing expenses, segment operating earnings grew
9.7 percent over FY 2012 to reach the $200 million mark.
Operating margins improved by 60 basis points to reach
14.4 percent of sales. BSG ended the fiscal year with
1,245 stores, including 161 franchises, an increase of
55 stores over FY 2012. Distributor sales consultants
totaled 982 at year-end.
Moving into FY 2014, our strategy for growth at BSG remains
unchanged: to continue store expansion, both organically and
through acquisitions, to increase our footprint in existing areas
as well as new territories.
SUMMARY
In summary, sales performance in FY 2013 was somewhat
mixed. Sales growth from our BSG, Sally International and
Sally U.S. Beauty Club customers was strong. However, trac
from the Sally non-Beauty Club customer was down and
impacted overall sales growth. As we move into fiscal 2014,
I believe that we have embarked on the right initiatives to
improve retail trac in the Sally U.S. stores and continue the
strong performance at BSG and our international businesses.
As always, we remain focused on delivering solid results
while investing to ensure that our long-term performance is
sustainable. Our objectives in FY 2014 are straightforward:
• Continue to grow sales and cash flow while generating strong
earnings and healthy operating margins;
• Continue to grow our store base organically and make strategic
and synergistic acquisitions when appropriate;
• Make global investments in key regions to expand our
international footprint; and
• Remain disciplined in our investments for growth and capital
management to further enhance shareholder return.
WE ARE GRATEFUL FOR THE CONTINUED
SUPPORT OF OUR CUSTOMERS, OUR
SUPPLIERS, OUR PEOPLE AND, OF COURSE, OUR
SHAREHOLDERS.
SALLY BEAUTY HOLDINGS