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Sally Beauty (SBH) Stock Falls Since Q2 Earnings: Here's Why
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Sally Beauty Holdings, Inc. (SBH - Free Report) has fallen 9.3% since its second-quarter fiscal 2018 earnings release. This is primarily due to the company’s earnings miss, after a beat in the preceding quarter. Further, decline in comps and contraction in margins also disappointed.
Apart from these, the trimmed guidance for fiscal 2018 has also hurt investors’ sentiment. Notably, Sally Beauty posted earnings of 54 cents, which missed the Zacks Consensus estimate by a penny.
Consequently, this Zacks Rank #4 (Sell) stock has lost 9.2%, against the industry’s gain of 7.3% in the past three months. Even a top-line beat has failed to instill confidence in the stock. Net sales of $975.3 million inched up 0.9%, and also came ahead of the Zacks Consensus Estimate of $974 million.
Factors Pulling the Stock Down
Declining Comps
Consolidated same-store sales edged down 1.4% in the fiscal second quarter. This decline resulted from the decrease in comps in the Sally Beauty Supply (“SBS”) and the Beauty Systems Group (“BSG”) segments. Same-store sales shrunk 1.6% in the SBS segment and 1.2% in the BSG segment.
Per management, the hurricanes in the fourth quarter of fiscal 2017 negatively impacted its business in Puerto Rico. This, in turn, dampened sales growth and same-store sales performance by approximately 10 basis points (bps). We note that in the preceding quarter, consolidated same-store sales had declined 2.2%, and in the fourth quarter of fiscal 2017, the same dipped 1.4%.
Meanwhile, for fiscal 2018, the company now expects same-store sales to be down almost 1% from the earlier projected flattish guidance.
Sally Beauty Holdings, Inc. Price, Consensus and EPS Surprise
Gross margin, an important metric of a company’s financial health, contracted 60 bps to 49.9% in the fiscal second quarter. Per management, consolidated gross margin was impacted by a segment revenue mix shift toward the lower margin BSG segment. This follows the gross margin contraction of 30 bps in the preceding quarter. Furthermore, for fiscal 2018, gross margin is expected to decline slightly compared with the prior flattish guidance.
Meanwhile, the adjusted operating margin also shrunk 120 bps to 12.1% in the reported quarter. In first-quarter fiscal 2018, the adjusted operating margin descended 20 bps. We note that management still expects adjusted operating income to be down slightly for this fiscal.
You Can’t Ignore Few Fundamentals
Sally Beauty is taking several initiatives to stoke its top-line growth. It completed the distribution center investments to enable shipping of Sally e-commerce orders in two days or less, in the United States. The company also completed the launch of two new color lines — Wella ColorCharm Paints and Arctic Fox — to further fortify hair color options in Sally Stores.
These apart, the company also closed the testing and refinement of the new Sally loyalty program, which, it plans to launch nationally before the end of this fiscal. The company is optimistic about this program as it is likely to drive traffic.
3 Retail Stocks Hogging the Limelight
Urban Outfitters (URBN - Free Report) delivered an average positive earnings surprise of 19.8% in the trailing four quarters. The stock has a long-term earnings growth rate of 12% and flaunts a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Shoe Carnival (SCVL - Free Report) recorded an average positive earnings surprise of 21.3% in the last four quarters. This Zacks Rank #1 company has a long-term earnings growth rate of 12%.
Fossil Group (FOSL - Free Report) came up with an average positive earnings surprise of 54.1% over the preceding four quarters. The Zacks Rank #2 (Buy) company has a long-term earnings growth rate of 5%.
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It's hard to believe, even for us at Zacks. But while the market gained +21.9% in 2017, our top stock-picking screens have returned +115.0%, +109.3%, +104.9%, +98.6%, and +67.1%.
And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - 2017, the composite yearly average gain for these strategies has beaten the market more than 19X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation.
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Sally Beauty (SBH) Stock Falls Since Q2 Earnings: Here's Why
Sally Beauty Holdings, Inc. (SBH - Free Report) has fallen 9.3% since its second-quarter fiscal 2018 earnings release. This is primarily due to the company’s earnings miss, after a beat in the preceding quarter. Further, decline in comps and contraction in margins also disappointed.
Apart from these, the trimmed guidance for fiscal 2018 has also hurt investors’ sentiment. Notably, Sally Beauty posted earnings of 54 cents, which missed the Zacks Consensus estimate by a penny.
Consequently, this Zacks Rank #4 (Sell) stock has lost 9.2%, against the industry’s gain of 7.3% in the past three months. Even a top-line beat has failed to instill confidence in the stock. Net sales of $975.3 million inched up 0.9%, and also came ahead of the Zacks Consensus Estimate of $974 million.
Factors Pulling the Stock Down
Declining Comps
Consolidated same-store sales edged down 1.4% in the fiscal second quarter. This decline resulted from the decrease in comps in the Sally Beauty Supply (“SBS”) and the Beauty Systems Group (“BSG”) segments. Same-store sales shrunk 1.6% in the SBS segment and 1.2% in the BSG segment.
Per management, the hurricanes in the fourth quarter of fiscal 2017 negatively impacted its business in Puerto Rico. This, in turn, dampened sales growth and same-store sales performance by approximately 10 basis points (bps). We note that in the preceding quarter, consolidated same-store sales had declined 2.2%, and in the fourth quarter of fiscal 2017, the same dipped 1.4%.
Meanwhile, for fiscal 2018, the company now expects same-store sales to be down almost 1% from the earlier projected flattish guidance.
Sally Beauty Holdings, Inc. Price, Consensus and EPS Surprise
Sally Beauty Holdings, Inc. Price, Consensus and EPS Surprise | Sally Beauty Holdings, Inc. Quote
Falling Margin
Gross margin, an important metric of a company’s financial health, contracted 60 bps to 49.9% in the fiscal second quarter. Per management, consolidated gross margin was impacted by a segment revenue mix shift toward the lower margin BSG segment. This follows the gross margin contraction of 30 bps in the preceding quarter. Furthermore, for fiscal 2018, gross margin is expected to decline slightly compared with the prior flattish guidance.
Meanwhile, the adjusted operating margin also shrunk 120 bps to 12.1% in the reported quarter. In first-quarter fiscal 2018, the adjusted operating margin descended 20 bps. We note that management still expects adjusted operating income to be down slightly for this fiscal.
You Can’t Ignore Few Fundamentals
Sally Beauty is taking several initiatives to stoke its top-line growth. It completed the distribution center investments to enable shipping of Sally e-commerce orders in two days or less, in the United States. The company also completed the launch of two new color lines — Wella ColorCharm Paints and Arctic Fox — to further fortify hair color options in Sally Stores.
These apart, the company also closed the testing and refinement of the new Sally loyalty program, which, it plans to launch nationally before the end of this fiscal. The company is optimistic about this program as it is likely to drive traffic.
3 Retail Stocks Hogging the Limelight
Urban Outfitters (URBN - Free Report) delivered an average positive earnings surprise of 19.8% in the trailing four quarters. The stock has a long-term earnings growth rate of 12% and flaunts a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Shoe Carnival (SCVL - Free Report) recorded an average positive earnings surprise of 21.3% in the last four quarters. This Zacks Rank #1 company has a long-term earnings growth rate of 12%.
Fossil Group (FOSL - Free Report) came up with an average positive earnings surprise of 54.1% over the preceding four quarters. The Zacks Rank #2 (Buy) company has a long-term earnings growth rate of 5%.
Today's Stocks from Zacks' Hottest Strategies
It's hard to believe, even for us at Zacks. But while the market gained +21.9% in 2017, our top stock-picking screens have returned +115.0%, +109.3%, +104.9%, +98.6%, and +67.1%.
And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - 2017, the composite yearly average gain for these strategies has beaten the market more than 19X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation.
See Them Free>>