Even in difficult economic times, there are certain things that consumers will not give up. Food can always be substituted for at a lower cost, but some items or traits cannot. Vanity is one of these traits, and will always be one of the last sacrificed in the face of a money crunch. If a company can offer a mix of products to capitalize on this human frailty, it will have found a solid way to capitalize in a distressed economy.
Sally Beauty Holdings Inc., a retail and professional beauty products company, offers retail products under several national brand names and professional products to salon outlets, also under different brand names. The company operates through two divisions, Sally Beauty Supply and Beauty Systems Group.
The Sally Beauty Supply segment of the company offers retail, third-party branded products such as Clairol, Revlon and Conair to retail outlets. Additionally, this segment offers skin, nail and styling appliances. The Beauty Systems Group is a distributorship and offers a wide range of professional products for salon use. Currently, the company operates over 3,500 outlets and supplies 193 franchised stores in North America, Europe and Japan.
Although the company experienced a 0.03% decline in the second quarter (with store sales up 2.1%, GAAP 0.13 per share,) it has been bearing up under the recessionary pressures all companies have had to deal with. For the most part, much of the second quarter decline can be traced to currency moves and does not appear to reflect the overall health of the company or its third-party brands.
Sally Beauty Holdings, offering a sop to vanity in a time where many consumers are looking for a relatively inexpensive way to pamper themselves, has unsurprisingly taken only small dips as a result of current conditions. Brand loyalty can’t be overlooked as a factor in this recessionary bulwark. Moving forward, the company seems to be in a nice place to weather current economic conditions and should come out of them in fine fashion.
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