Sally Beauty Holdings ( NYSE: SBH ) broke higher in early trading on Thursday after sliding past consensus marks with its FQ1 earnings report.
Total sales were down 2.4% due primarily by the previously announced store closures and unfavorable foreign exchange impact. Consolidated comparable sales increased 1.1%. At constant currency, global e-commerce sales increased 14% compared to a year ago to represent 9.5% of consolidated sales for the quarter.
Consolidated GAAP gross margin was flat compared to a year ago at 51.0%. Higher product margin at Sally Beauty, driven by pricing leverage and higher owned brand penetration, was offset by lower product margin at Beauty Systems Group from an unfavorable sales mix shift between the segment’s stores and expanded Regis partnership. Adjusted gross margin was down 20 bps to 50.8% of sales.
Sally Beauty ( SBH ) ended the quarter with cash of $99M and an outstanding balance of $65M under its asset-based revolving line of credit. Inventory was dowm 1.9% to $987M. Cash flow from operations was $55.0M and capital expenditures in the quarter totaled $25.0M.
"We successfully implemented our distribution center consolidation and store optimization plan, furthering our goal to maximize the value of our large real estate portfolio, optimize our supply chain and provide a seamless omni-channel experience to our customers," noted CEO Denise Paulonis.
Looking ahead, FY23 sales are expected to decline by low-single digits compared to a year ago. The anticipated drop reflects approximately 150 to 200 basis points of unfavorable impact due to store closures net of expected sales recapture rates from optimization efforts, and approximately 150 basis points of anticipated impact from foreign exchange headwinds.
Shares of SBH rose 1.98% premarket to $16.48.
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Sally Beauty tracks higher after earnings topper