Businessweek

Sally Beauty Holdings, Inc. operates as a specialty retailer and distributor of professional beauty supplies. Business Units The company operates primarily through two business units, Sally Beauty Supply and Beauty Systems Group (BSG). Sally Beauty Supply This business unit is an open-line and exclusive-label distributor of professional beauty supplies offering professional beauty supplies to both retail consumers and salon professionals primarily in North America, Europe, Puerto Rico, and South America. As of September 30, 2012, this business unit operated 3,284 company-operated retail stores, including 2,596 of which are located in the U.S. (with the remaining 688 company-operated stores located in Puerto Rico, Canada, Mexico, Chile, the United Kingdom, Ireland, Belgium, France, Germany, the Netherlands, and Spain), as well as supplied 25 franchised stores located outside the U.S. This business unit’s stores carry a selection of professional beauty supplies for both retail customers and salon professionals, with between 6,000 and 9,000 stock keeping units (SKUs) (primarily in the U.S. and Canada) of beauty products across product categories, including hair color, hair care, skin and nail care, beauty sundries, and electrical appliances. This business unit’s stores carry major third-party brands, such as Clairol, Revlon, and Conair, as well as a selection of exclusive-label merchandise. In addition, this business unit offers an ethnic product selection with specific appeal to African-American and Hispanic customers. BSG This business unit operates as a full-service distributor of professional beauty supplies in the U.S., targeting salons and salon professionals. As of September 30, 2012, this business unit had 1,031 company-operated stores, supplied 159 franchised stores, and had a sales force of approximately 1,044 professional distributor sales consultants in all states in the U.S., in portions of Canada, and in Puerto Rico, Mexico, and certain European countries. This business unit, through its store base and sales force, including its franchise-based business Armstrong McCall, L.P., accesses a portion of the U.S. professional beauty sales channel. This business unit’s stores provide a selection of between 5,000 and 10,000 beauty product SKUs that include hair color, hair care, skin and nail care, beauty sundries, electrical appliances, and other beauty items. This business unit operates stores under the CosmoProf service mark. This business unit also franchises professional beauty supply outlets in the southwest portion of the U.S. and in Mexico, and supplies sub-distributors in Europe. This business unit’s stores are segmented into areas arranged by product type with certain areas dedicated to major third-party brands, such as Paul Mitchell, Wella, Sebastian, Goldwell, Joico, and Aquage. This business unit’s stores are primarily located in secondary strip shopping centers. Distribution The company’s products are sold through the company's Websites, such as www.sallybeauty.com, www.cosmoprofbeauty.com, and www.ebobdirect.com; and e-commerce platforms in the U.S. and internationally. Suppliers For the year ended September 30, 2012, the company’s major suppliers included The Procter & Gamble Company; the Professional Products Division of L'Oreal USA S/D, Inc. (L'Oreal); Conair Corporation; John Paul Mitchell Systems; and Shiseido Cosmetics (America) Limited. Acquisitions In November 2011, the company acquired the Kappersservice Floral B.V. and two related companies (together, the ‘Floral Group’), a distributor of professional beauty products with 19 stores located in the Netherlands. In October 2011, the company acquired certain assets and the business of a former distributor of John Paul Mitchell Systems beauty products with sales primarily in Ohio and West Virginia. Strategy The primary elements of the company’s growth strategy are to increase sales productivity of its stores; expand its store base; improve internationally; and pursue strategic acquisitions and new territories for organic growth. Regulation The company is subject to various laws and regulations, including the Food and Drug Administration, the Federal Trade Commission, and the Consumer Products Safety Commission. Trademarks and Other Intellectual Property Rights The company owns approximately 270 trademark registrations in the U.S., and approximately 1,000 trademark registrations outside the U.S. Competition The company’s competitor includes L'Oreal.