Why Sally Beauty Holdings Inc. Stock Soared Today

By Steve SymingtonFool.com

What:Shares of Sally Beauty Holdings closed up over 10% Thursday after the beauty supply specialist released mixed fiscal fourth quarter 2015 results and offered encouraging perspective surrounding fiscal 2016 guidance.

So what:Quarterly net sales climbed 2.1% to $964.2 million, helped by a combination of new locations and consolidated same-store sales growth of 3.5%. Sales from the Sally Beauty Supply segment climbed 0.2% to $582 million, including 1.8% same-store sales growth, while sales from Sally's Smaller Beauty Systems group rose an encouraging 5.2% to $389.9 million, helped by same-store sales growth of 7.4%. On a consolidated basis, unfavorable currency exchange rates reduced revenue by $27.6 million, or 2.9%.

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On the bottom line, that translated to a 4.6% decline in adjusted earnings -- which excludes roughly $2.6 million in expenses from its Sally Germany restructuring -- to $59.2 million, or $0.38 per share.

Analysts, on average, were expecting adjusted earnings of $0.39 per share on slightly lower revenue of $963.9 million.

Now what:For full fiscal year 2016, Sally Beauty expects same-store sales growth to be in the low 3% range, with sequential improvement expected as the year progresses. In addition, consolidated gross margin should expand in the range of 35 to 45 basis points (from 49.5% in fiscal 2015), while consolidated organic store growth should be roughly 3%.

During the subsequent conference call, Sally Beauty CFO Mark Flaherty elaborated, "We believe we can achieve the gross margin expansion because of the initiatives we have started in the back half of fiscal 2015, such as tactical and zone pricing as well as our ongoing vendor negotiations."

What's more, Sally Beauty CEO Christian Brickman noted the company likely didn't enjoy the full benefit of initiatives it started in fiscal 2015. But in 2016, Brickman insists "we fully expect it, [...] and we see the momentum building in the business."

Of course, it also helps that going into yesterday's close, shares of Sally Beauty were down nearly 30% year-to-date as the company worked to position its business to offset anticipated cost and macroeconomic headwinds. But now that its efforts are showing early signs of bearing fruit going into the new fiscal year, it's no surprise investors were willing to bid up the stock today.

The article Why Sally Beauty Holdings Inc. Stock Soared Today originally appeared on Fool.com.

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