The third quarter wasn’t exactly pretty for Sally Beauty as its sales and earnings slipped.
Net earnings in the quarter were $46.6 million, or 43 cents per diluted share, versus $76.2 million, or 66 cents per diluted share, in the prior-year period. Adjusted for one-time charges, net earnings were $59.8 million, or 55 cents per diluted share, versus $78 million, or 68 cents per diluted share, in the year-earlier quarter, the company reported.
Adjusted diluted earnings per share fell four cents short of a MarketBeat-published analyst average estimate although sales beat a $951 million prediction.
Consolidated net sales were $961.5 million, down 6% versus the 2021 quarter, as comparable sales decreased 3.6% year over year after gaining 43.1% in the 2021 period. Continued inflationary pressures, supply chain challenges and difficult comparisons to the 2021 quarter drove the comp store sales decline, Sally Beauty noted. The company operated 149 fewer stores at the end of the quarter compared to the year-earlier period. Foreign currency translation dropped consolidated net sales by 130 basis points in the quarter. Global e-commerce sales were $81 million in the period or 8.4% of consolidated net sales.
On the retail side of the business, Sally Beauty Supply’s net sales were $551.7 million in the quarter, down 8.5% versus the year-before period with comps sliding 5% after a 43.1% gain in the 2021 quarter. The division had an unfavorable impact of 200 basis points from foreign currency translation on reported sales and operated 143 fewer stores at the end of the period year over year. At quarter’s end, net store count was 3,468. Division e-commerce sales were $33 million, or 6% of sales for the quarter.
Sales in the Beauty Systems Group, which uses stores and representatives to sell to professional customers, posted net sales of $409.7 million in the quarter, down 2.4% from the year-past period as comps slipped 1.6% after a 43% gain in the 2021 period and six fewer stores operated by quarter’s end, Sally Beauty stated. Division e-commerce sales were $48 million or 11.6% of sales for the period.
“During the third quarter, we delivered healthy gross margins of 51% and adjusted operating margin of 10.5% despite the challenging macro backdrop,” said Denise Paulonis, Sally Beauty president and CEO, in announcing the financial results. “Our teams executed well amidst continued inflationary and supply chain pressures that impacted topline performance. We are pleased that our strong financial position allowed us to continue investing for growth while completing the full repayment of $300 million of our 8.75% senior secured notes in the quarter. With a healthy balance sheet, a strong operating infrastructure and a sticky core customer, we are well positioned to continue navigating the complex macro environment.”
