Sally Beauty posted mixed second-quarter results and adjusted its guidance downward, citing uncertain economic prospects as the year progresses.
Net earnings were $39.2 million, or 38 cents per diluted share, versus $29.2 million, or 27 cents per diluted share, in the year-previous quarter. Adjusted for one-time events, net earnings were $43.5 million, or 42 cents per diluted share, versus $37.8 million, or 35 cents per diluted share, in the year-before period.
A MarketBeat-published analyst consensus estimate called for earnings per adjusted diluted share of 39 cents and revenues of $901 million.
Consolidated comparable sales at Sally Beauty decreased 1.3%, driven primarily by what the company said were external factors, including weather that affected consumer spending generally and stylist appointments at Beauty Systems Group (BSG). This was offset partially by strong growth in hair color and digital marketplaces at Sally Beauty Supply (SBS), as well as continued momentum at BSG related to expanded distribution and new brand innovation.
Second-quarter consolidated net sales were $883.1 million, down 2.8% versus the year-prior quarter, the company stated, with results including an unfavorable impact from a foreign currency impact of 110 basis points and 22 fewer stores at the end of the period hitting revenue. On a constant currency basis, global e-commerce sales were $94 million, or 10.7% of consolidated net sales.
Operating earnings were $69.4 million versus $59.6 million in the year-earlier quarter.
SBS segment net sales were $500.6 million, down 2.5% in the quarter year over year with comps slipping 0.3%, Sally Beauty noted while BSG segment net sales were $382.6 million, down 3.2% with comps sliding 2.7%.
Sally Beauty adjusted its full-year guidance as the company announced second-quarter financial results. Sally Beauty expects comps to be flat to down 1% year over year and adjusted operating margin to be in the range of 8% to 8.5%. The company anticipates consolidated net sales being approximately 75 basis points lower than comparable sales due to the expected unfavorable impact from foreign exchange rates.
In the first quarter, consistent with prior guidance, Sally Beauty stated it expected full-year comps to be flat to up 2% year over year and adjusted operating margin to be in the range of 8.5% to 9%. The company anticipated consolidated net sales being approximately 100 basis points lower than comp sales due to the expected unfavorable impact from foreign exchange rates.
In reporting the second-quarter results, Denise Paulonis, Sally Beauty president and chief executive officer, said, “We are pleased to report a third consecutive quarter of adjusted operating margin expansion and increased profitability, driven by strong gross margin performance and careful cost control. We were able to deliver these results amidst a challenging macro backdrop, which impacted our topline performance. The business continues to generate strong cash flow, enabling us to maintain our balanced capital allocation strategy, which prioritizes investing in our strategic initiatives, optimizing our balance sheet and returning value to shareholders. During the second quarter, we further reduced our debt levels by $36 million and repurchased $10 million of stock under our share repurchase program.”
