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Sally Beauty's Profits Jump to $14.3 Million

Sally Beauty Holdings attributed a solid first quarter to the portion of its business that targets salons and salon professionals, which helped shield the firm from slower retail sales patterns impacting other manufacturers.

NEW YORK — Sally Beauty Holdings attributed a solid first quarter to the portion of its business that targets salons and salon professionals, which helped shield the firm from slower retail sales patterns impacting other manufacturers.

Sally's earnings for the quarter ended Dec. 31 vaulted to $14.3 million from $3.1 million in the same period a year ago, when the firm incurred transaction costs associated with splitting from Alberto-Culver Co. in late 2006.

Sally earned 8 cents a diluted share in the first quarter, up from 2 cents in the same period a year ago. Wall Street analysts had expected the firm to earn 9 cents a share, according to Yahoo Finance.

Quarterly sales rose 4.1 percent to $655.8 million from $629.9 million a year ago.

"Over 50 percent of consolidated revenues were sales to salon professionals," stated president and chief executive officer Gary Winterhalter.

He noted, however, that a drop in same-store sales within the firm's 2,726-store Sally Beauty Supply chain (to a 0.3 percent rise from a 3.4 percent gain in the same period last year) was a result of a "generally weak selling environment."

Revenues of the Sally Beauty Supply chain rose 9.8 percent to $408.3 million, from $371.9 million in the same period a year ago.

Comparable-store sales within the firm's 905-store Beauty Systems Group gained 7.5 percent, compared with a 9.9 percent rise in the year-ago period. BSG revenues for the first quarter declined 4 percent to $247.5 million, from $257.9 million a year ago.

Overall, same-store sales were up 2.1 percent, compared with a 5 percent increase a year ago.

"We are very pleased with the company's first-quarter sales and strong profitability, signaling an excellent start to the fiscal year," stated Winterhalter, who added during a conference call with analysts Thursday morning that he believes Sally Beauty Supply has the potential to expand to 3,000 stores.
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