Sally Beauty Holdings (SBH) has untangled itself from former parent Alberto-Culver. Formerly Sally Beauty Co., the firm is one of the US's largest retailers and distributors of professional beauty supplies. While the US accounts for more than 80% of sales, the company also has stores in Canada, Europe, and South America. More than 3,100 Sally Beauty Supply stores sell more than 6,000 hair, skin, and nail products. Sally Beauty also sells its products online. SBH's Beauty Systems Group (BSG) employs more than 1,100 sales consultants and operates about 995 CosmoProf and Armstrong McCall stores that sell products only to salons and beauty professionals. Sally Beauty Supply was founded in New Orleans in 1964.
SBH has performed well since its separation from Alberto-Culver, logging strong sales and profit growth. Indeed, over the past five years sales have increased by nearly 38%, while net income has nearly doubled. In the most recent annual comparison, fiscal 2011 (ends September) sales were up 12% vs. 2010 and net income rose more than 48% over the same period. Its growth has been driven by new store openings, acquisitions, and international expansion. Most recently, SBH acquired the Netherlands-based beauty-supply sellers Kappersservice Floral B.V., Hair Zone B.V., and Exphair B.V. in late-2011 to further expand its reach into Europe. In the US, the company purchased Aerial Company, a beauty products wholesaler with two distribution facilities and about 80 stores in the Midwest, for $70 million in late 2010.
The aging populations in Europe and the US are also helping drive demand for SBH's hair color, hair loss prevention products, and other products and services designed to mask the signs of aging. The company also caters to African-American and Hispanic customers with a broad selection of ethic products, accounting for about 9% of total sales in Sally Beauty stores over the past three years. The beauty supply distributor believes that its focus on ethnic products gives it an advantage over the competition. Latin America, including Chile and Mexico, is another growth market for the company. In fiscal 2011, 18% of SBH's sales were rung up outside the US (up from 16% two years ago).
SBH purchases its beauty products directly fro manufacturers, including Procter & Gamble, the professional products division of L'Oréal, Conair, John Paul Mitchell Systems, and Shiseido Cosmetics, which together account for about 42% of its merchandise purchases. A wrinkle in a string of otherwise good hair days for the company came when BSG lost its exclusive distribution rights to L'Oreal USA professional products, although it retained its non-exclusive rights, in 2007. Consequently, L'Oréal, one of BSG's largest suppliers, is also now a direct competitor of the company.
The private equity firm Clayton, Dubilier & Rice (CDR) is SBH's largest shareholder with about 35% of the stock. (CDR initially acquired a 47% stake in SBH when it was spun off by Alberto-Culver in November 2006.) – less
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