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Sally Beauty (SBH) Down 10% on Q3 Revenue Miss, Earnings Match Estimates

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On Thursday, beauty supply company Sally Beauty Co. (SBH - Free Report) reported its fiscal 2016 third quarter results, sending its stock sliding around 10% in midday trading.

The company reported adjusted diluted earnings per share of $0.47 (excluding one cent from non-recurring items), matching the Zacks Consensus Estimate and increasing 14.6% year-over-year. Total revenues, however, missed our consensus estimate of $1 billion for the quarter, coming in at $998.2 million, but grew 3.1% year-over-year.

Sally Beauty blames a weak performance in its North American business, as well as overall traffic and marketing. CEO Chris Brickman said in a statement that “Sally’s retail traffic is clearly taking longer to return to historical levels than we anticipated. We do believe there were a couple of tactical marketing changes in the quarter that negatively impacted traffic growth and we have moved quickly to address these issues.”

But going forward, the company “remain[s] optimistic that Sally can get back to steady, sequential sales improvement.”

While consolidated sales were a disappointment, same-store sales increased 1.3% during the third quarter, and inventory grew to $909.3 million as of June 30, 2016, up $34.7 million from the year ago inventory. Consolidated gross margin came in at 50%, up 30 bps from the prior year.

Sally Beauty is currently a #4 (Sell) on the Zacks Rank.

 

SALLY BEAUTY CO Price, Consensus and EPS Surprise

SALLY BEAUTY CO Price, Consensus and EPS Surprise | SALLY BEAUTY CO Quote

 

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