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Breach hits Sally Beauty Q3 profit; will close 16 German stores

8/6/2015

Denton, Texas – Sally Beauty Holdings is feeling the impact of its data breach.



Costs related to a data breach discovered in May 2015, as well as higher selling, general and administrative (SG&A) expenses, helped reduce profit at Sally Beauty during the third quarter of fiscal 2015. Net earnings fell 8% to $62.46 million, from $67.76 million the same period a year earlier.



Net sales rose 2% to $967.89 million, from $949.27 million. Same-store sales increased 2% in the Sally Beauty Supply division and 5.6% in the Beauty Systems division.



As part of a restructuring of its German business, Sally Beauty will close 16 underperforming retail stores and two supporting administrative offices. Sally Beauty will continue to operate 17 retail stores in Germany after completion of the restructuring, expected by end of September 2015.



“We anticipate significant labor and rental cost inflation to affect our business as we compete for talent and real estate with other retailers,” said Christian Brickman, president and CEO. “We plan to offset the bulk of these increases through cost reductions and tactical pricing measures. However, we now believe that this cost inflation will be a moderate drag on operating earnings growth for next year.”


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