Sally Beauty Inflates Key Sales Metric With New Calculation

Beauty retailer adds 120 basis points to new Comparable Sales metric and includes revenue once excluded from the calculation.

February 3, 2022

In a footnote in its latest 10-Q, Sally Beauty (SBH), a retailer and distributor, revealed it now uses Comparable Sales instead of Same Store Sales to measure performance. The new Comparable Sales metric includes all ecommerce revenue rather than ecommerce sales from certain platforms as stated in prior filings.

The latest quarterly report also includes the following new language:

“Additionally, our comparable sales include sales to franchisees and full service sales.”

Since prior filings include sales to franchisees in Sally’s SBS segment, these sales aren’t new to the Comparable Sales calculation. What is new, according to our analysis, are full service sales and internet sales of the company’s Sinelco Group subsidiaries.

With 136 fewer stores compared to the prior year— and ecommerce sales growth neary double the overall sales growth rate— the new Comparable Sales calculation appears to be more flattering to Sally than the Same Store Sales metric it replaced. It’s no wonder the new Comparable Sales metric is the first item CEO Denise Paulonis boasted about in Sally’s earnings announcement.

Even more important is the impact the change had on Sally’s year-over-year performance. The new calculation, according to our analysis, actually worsened the prior year’s Comparable Sales decline, from (3.7%) to (4.9%). With Comparable Sales growth in the latest quarter of 6.1%, the change resulted in a year-over-year increase of 1,100 bps instead of 980 bps.

DuDil asked Sally Beauty to provide a Same Store Sales metric for the latest quarter to better understand its impact and compare with our analysis. We’ll update subscribers when we receive new information.

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