Sally Beauty Holdings Inc. (SBH), a specialty retailer of professional beauty supplies, reported Thursday a higher profit in its fourth quarter, driven by growth in same store sales. Quarterly earnings per share, on an adjusted basis, increased from last year, but missed market projections.
Fourth-quarter net earnings rose 25.6% to $26.97 million from $21.48 million in the prior year period. On a per share basis. Earnings climbed 25% to $0.15 from last year's $0.12.
The latest quarter results included $2.2 million in non-cash interest income from marked-to-market changes in the fair value of the company's interest rate swaps, while prior year results included $1.3 million, or approximately $0.01 per share, in non-cash interest income from marked-to-market changes in the fair value of the interest rate swaps.
On an adjusted basis, net earnings increased 22.8% to $24.82 million or $0.14 per share from $20.20 million or $0.11 per share in the year-ago period.
On average, five analysts polled by Thomson Reuters expected the company to report earnings of $0.15 per share for the quarter. Analysts' estimates typically exclude special items.
Net sales for the quarter increased 0.6% to $676.18 million from $672.23 million in the prior year period, and beat four analysts' estimated revenues of $671.81 million. The company attributed the increase to 2.4% rise in same store sales in the fourth quarter and the addition of new stores, despite a negative impact from foreign currency exchange.
Segment-wise, Sally Beauty Supply's sales of $438.0 million rose 2% from $429.3 million last year, and same store sales rose 3.1%. Beauty Systems Group generated sales of $238.1 million, down 2% from $242.9 million a year ago, while same store sales rose 0.4%.
Consolidated gross profit was $319.8 million, an increase of 1.5% over prior year's gross profit of $314.9 million. Gross profit as a percentage of sales was 47.3%, up 50 basis points from last year.
For the fiscal year 2009, Sally Beauty Holdings' net earnings went up 27.8% to $99.12 million from last year's $77.58 million, and earnings per share grew 28.6% to $0.54 from $0.42 in fiscal year 2008. Adjusted net earnings were $95.9 million, an increase of 19.2% from last year's $80.5 million, and adjusted earnings per share rose 18.2% to $0.52 from prior year's $0.44. Full-year net sales edged down 0.4% to $2.637 billion from $2.648 billion last year, while same store sales rose 1.8%.
Commenting on the results, Gary Winterhalter, President and Chief Executive Officer, stated, "Sally Beauty Holdings delivered very good fourth quarter and full year results despite a difficult recessionary environment. For the fiscal year consolidated same store sales finished up 1.8% with gross margin expansion of 60 basis points and GAAP net earnings growth of 28%. We executed on all of our strategic objectives, including 3.7% growth in our store base achieved through organic store openings, acquisitions and the strengthening of our balance sheet through a $73 million reduction in long-term debt."
Winterhalter added, "We believe we are well positioned as we head into fiscal 2010 and remain confident we will continue to execute against our strategy and deliver another year of solid performance."
SBH closed Wednesday's regular trading session at $7.55, up $0.11, on a volume of 1.08 million shares.
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