Sally Beauty Q2 2020 Store Sales Decline, E-commerce up 353% in April

Sally Beauty Holdings, Inc. has released its financial results for Q2 2020, which observed a 7.9% decline in net sales year-over-year. The results also revealed the impact the COVID-19 pandemic has had on sales: consolidated same store sales decreased by 7.1% and e-commerce sales was up 28% in Q2, 52% in March and 353% in April.

Previously: Sally Beauty Announces $300M Senior Secured Notes Offering

The 7.1% decrease in consolidated same store sales is attributable to the shutdown of customer-facing operations in virtually all global stores in mid-March due to the pandemic. Prior to March 12, the COVID-19 inflection date for the company, same store sales had been up 4.7%.

Consolidated net sales were $871.0 million in Q2, down 7.9% compared to the prior year, driven by an initial increase in same store sales, followed by the rolling shut down of customer-facing operations at almost all global stores starting in mid-March, a smaller store base with 31 fewer stores versus the prior year and an unfavorable impact from foreign currency translation of approximately 30 basis points on reported sales.

GAAP diluted earnings per share in the second quarter were $0.12, down 77.8% from the prior year, driven primarily by lost sales from the shutdown of public-facing operations in stores globally, a modest gross margin dilution from loss of vendor allowances on lower inventory purchases and incremental COVID-19 expenses related to furloughs and were partially offset by aggressive cost cutting in March in reaction to COVID-19.

Adjusted diluted earnings per share, excluding charges related to the company’s COVID-19 furlough expenses and transformation efforts in both years, were $0.23 in Q2 2020, compared to $0.51 in Q2 2019, a decrease of 54.9%.

By segment

• Sally Beauty Supply
• Net sales: $519.5 million, down 8.1% year-over-year
• Same store sales down 7%, up 4.8% prior to March inflection date
• E-commerce grew 56% for Q2, 118% in March and 872% in April—after the quarter ended
• Beauty Systems Group
• Net sales: $351.5 million, down 7.6% year-over-year
• Same store sales down 7.4%, up 4.5% prior to March inflection date
• E-commerce grew 10% for Q2, 12% in March and 129% in April—after the quarter ended

Sally Beauty Holdings, Inc. has also withdrew its 2020 guidance due to uncertainties surrounding the COVID-19 pandemic and is not issuing financial guidance in relation to its Q2 2020 results.

“The company was on track for an excellent quarter, having achieved important milestones in its digital and retail transformation,” president and CEO Chris Brickman said. “When COVID-19 struck, the company accomplished an incredibly adept pivot. I would like to recognize the amazing people at [Sally Beauty Holdings] who in a few short weeks pivoted the company to dramatically reduce our cost structure and manage cash, aggressively reinforce liquidity, accelerate the roll-out of in-demand delivery service models, and manage through a massive increase in online demand. Our teams, led by our store and distribution center teams, are the real stars of this story and because of them we expect to emerge as a transformed enterprise with a much larger digital footprint and an even stronger competitive position in professional hair color and hair care. In addition, with our recent capital markets transactions, we believe we have enhanced our financial flexibility and are well-positioned to survive a prolonged downturn and emerge from this crisis stronger.”