Back to top

Image: Bigstock

Sally Beauty's (SBH) Q4 Earnings Top Estimates, Sales Up Y/Y

Read MoreHide Full Article

Sally Beauty Holdings, Inc. (SBH - Free Report) reported impressive fourth-quarter fiscal 2021 results, with the top and the bottom line beating the Zacks Consensus Estimate as well as increasing year over year. Sales increased across the segments, through which the company operates.

Management is impressed with its quarterly performance, which was above its expectations on the back of solid operational execution. The company is benefiting from the ongoing momentum and consistency across the business amid the pandemic.

Sally Beauty is focused on its four strategic growth pillars to boost topline in fiscal 2022. These include leveraging the digital platform, driving loyalty and personalization, undertaking product innovation and enhancing the supply chain.

Sally Beauty Holdings, Inc. Price, Consensus and EPS Surprise

 

Sally Beauty Holdings, Inc. Price, Consensus and EPS Surprise

Sally Beauty Holdings, Inc. price-consensus-eps-surprise-chart | Sally Beauty Holdings, Inc. Quote

 

Q4 in Detail

Sally Beauty reported adjusted earnings of 64 cents per share, which surpassed the Zacks Consensus Estimate of 50 cents. The metric increased from 63 cents reported in the year-ago quarter. The upside can be attributed to top-line growth and better gross profit performance.

Consolidated net sales of $990.3 million beat the Zacks Consensus Estimate of $971.7 million. The metric increased 3.4% year over year. Consolidated same-store sales moved up 2.1%, reflecting solid consumer demand with a slight pandemic-inflicted impact associated with restrictions in Europe. Favorable foreign currency rates benefited sales to the tune of nearly 90 basis points (bps).

Global e-commerce sales contributed 7.1% to net sales during the quarter. The company’s online business reflected gains from focus on digital capabilities as well as the implementation of strategic initiatives around fulfillment and customer engagement. Sally Beauty operated 127 less stores compared with the year-ago quarter’s levels.

Consolidated gross profit increased 2.4% to $501 million from $489.1 million reported in the year-ago quarter. Consolidated gross margin contracted 50 bps to 50.6%, mainly due to increased mix of Beauty Systems Group sales and reduced gross margin in the Beauty Systems Group.

The company reported selling, general and administrative (SG&A) expenses of $386.5 million, which increased $19.6 million, mainly due to higher labor and advertising expense, in sync with the earlier plans. As a percentage of sales, SG&A expenses were 39%, up from 38.3% reported in the year-ago quarter. For fiscal 2022, management expects SG&A expenses to increase year over year. The outlook reflects higher labor and freight costs, escalated planned expenditures across international markets along with investments in growth pillars.

Adjusted operating earnings declined to $115.8 million from $120.3 million reported in the year-ago quarter. Adjusted operating margin contracted from 12.6% to 11.7% in the fourth quarter.

Segment Details

Sally Beauty Supply: Net sales in the segment inched up 1.5% to $585.4 million, as the company saw strong consumer demand in the United States. Favorable foreign exchange had a positive impact of 120 bps on sales. Segment same-store sales rose 2.3%.

Net store count at the end of the quarter was 3,549, lower by 104 stores from the year-ago quarter’s level.

Beauty Systems Group: Net sales in the segment increased 6.2% to $404.9 million. Foreign-currency translations had nearly 60 bps positive impact on results. Further, segment same-store sales inched up 1.7%, as salons returned to more normalized capacity across most markets in the United States.

Net store count at the end of the quarter was 1,362, down by 23 stores from the year-ago quarter’s level. Total distributor sales consultants at the end of the quarter were 719 compared with 715 in the year-ago period.

Other Financial Aspects

The company ended the reported quarter with cash and cash equivalents of almost $401 million, long-term debt of $1,382.5 million and total stockholders’ equity of $280.7 million.

During the fourth quarter, cash flow from operations was $164 million on the back of solid earnings and timing of working capital requirements. Capital expenditures came in at $28.8 million during this time.

Zacks Investment ResearchImage Source: Zacks Investment Research

Fiscal 2022 Outlook

Sally Beauty expects fiscal 2022 net sales growth of 3-4% year over year. Net store count is anticipated to decline in the range of 1-2%, reflecting management’s focus on optimizing the store portfolio. The gross margin is likely to expand 40-60 bps year over year. Adjusted operating margin is envisioned to remain nearly flat year over year. Management also notified that starting from fiscal 2022, it will replace the same-store sales metric with comparable sales metric.

Shares of this Zacks Rank #4 (Sell) company have declined 11.1% in the past six months compared with the industry’s drop of 4.4%.

Upcoming Earning Releases in the Industry

Bath & Body Works, Inc. (BBWI - Free Report) is slated to report earnings on Nov 17, 2021. The company is likely to register a decline in the bottom line when it reports third-quarter 2021 results. Although, the consensus mark for quarterly earnings has moved up by a penny in the last seven days to 60 cents per share, it projects a 46.9% slump from the year-ago quarter’s reported number.

Bath & Body Works’ top line is also expected to decline year over year. The Zacks Consensus Estimate for quarterly revenues is pegged at $1,598 million, which suggests a decline of 47.7% from the figure reported in the prior-year quarter. BBWI presently carries a Zacks Rank #3 (Hold).You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

DICK'S Sporting Goods (DKS - Free Report) is slated to report earnings on Nov 23, 2021. The company is likely to register a decline in the bottom line when it reports third-quarter fiscal 2021 earnings. Although, the consensus mark for quarterly earnings has moved up 3.9% in the last 30 days to $1.88 per share, it projects a 6.5% drop from the year-ago quarter’s reported number.

DICK'S Sporting’s top line is expected to rise year over year. The consensus mark for quarterly revenues is pegged at $2,422 million, which suggests a slight growth of 0.4% from the figure reported in the prior-year quarter. DKS presently carries a Zacks Rank #3.

Ulta Beauty, Inc. (ULTA - Free Report) is slated to report earnings on Dec 2, 2021. The company is likely to register an increase in the bottom line when it reports third-quarter fiscal 2021 numbers. Although, the Zacks Consensus Estimate for quarterly earnings has moved down by a penny in the last 30 days to $2.39 per share, it projects a 45.7% jump from the year-ago quarter’s reported number.

Ulta Beauty’s top line is also expected to rise year over year. The Zacks Consensus Estimate for quarterly revenues is pegged at $1,886 million, which suggests a rise of 21.5% from the figure reported in the prior-year quarter. ULTA presently carries a Zacks Rank #3.