Sally Beauty Holdings fell short of analyst estimates for its second quarter as comparable sales in the consumer-oriented Sally Beauty Supply operating segment declined.
Net earnings were $29.2 million, or 27 cents per diluted share, versus $40.9 million, or 37 cents per diluted share, in the year-earlier quarter. Adjusted for one-time events, net earnings were $37.8 million, or 35 cents per diluted share, versus $44.6 million, or 41 cents per diluted share, in the prior-year period, the company reported.
A MarketBeat analyst consensus estimate called for earnings per adjusted diluted share of 39 cents and revenues of $910.72.
Consolidated comparable sales decreased 1.5%, primarily reflecting soft traffic and consumer purchasing trends at Sally Beauty Supply driven by the inflationary environment, the company indicated, partially offset by expanded distribution, product innovation and improving salon demand trends at Beauty Systems Group.
Consolidated net sales were down 1.1% in the quarter year over year to $908.4 million. Foreign currency translation had a favorable 50 basis point impact on consolidated net sales in the period. On a constant currency basis, Sally Beauty Holdings reported global e-commerce sales were $90 million. or 9.9% of consolidated net sales in the period.
In the Sally Beauty Supply segment, net sales were $513.2 million in the quarter, down 3.2% year over year. Foreign currency translation had a favorable 90 basis point impact on reported sales. On a constant currency basis, segment e-commerce sales were $34 million or 6.6% of segment sales for the period. Sally Beauty Supply comparable sales declined by 4% in the quarter year over year, primarily reflecting soft traffic and customer purchasing trends driven by the inflationary environment, the company stated.
In the professional-oriented Beauty Systems Group segment, net sales were $395.1 million in the quarter, up 1.7% year over year. On a constant currency basis, segment e-commerce sales were $56 million or 14.1% of segment net sales for the period. Beauty Systems Group segment comps grew 2% in the quarter year over year, primarily reflecting expanded distribution, product innovation and improving salon demand trends.
Operating earnings were $59.6 million versus $71.4 million in the year-earlier period, while adjusted operating earnings were $68.6 million versus $76.3 million.
“Our second quarter performance reflects the benefits of expanded distribution, product innovation and the strengthening of salon demand trends in our Beauty Systems Group segment, offset by moderating traffic and customer purchasing patterns in our Sally Beauty segment resulting from the inflationary environment,” said Denise Paulonis, Sally Beauty president and CEO, in announcing the financial results. “Amidst these cross-currents, our teams continued to advance our strategic initiatives and deliver engaging experiences for our customers as we focus on driving long-term growth and profitability. We further optimized our balance sheet by refinancing our $680 million senior unsecured note due 2025, which extended the maturity to 2032. We also generated solid cash flow from operations of $37 million in the quarter, allowing us to return value to shareholders through our share repurchase program.”
