Home > International Directory of Company Histories > Sally Beauty Company, Inc. - Changes in the Late 1990s and After

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Changes in the Late 1990s and After

Sally Beauty grew in new ways in the late 1990s and into the 2000s. The company kept abreast of its expanding empire by investing in its distribution network. In the mid-1990s, the retail outlets were served through four distribution centers, and the company was now looking for a new way to serve its southeastern market. In 1995, Sally made an investment of more than $15 million to build a huge new warehouse and distribution center in Jacksonville, Florida. It then made plans to close its older facility in Atlanta, Georgia. The 13-acre Jacksonville site housed a 225,000-square-foot building. Sally left room to expand the plant by an additional 100,000 square feet in the future. The company also invested more in advertising in the late 1990s. Sally had previously handled much of its marketing and advertising internally. In 1995, it spent over $1 million on advertising. In 1998, Sally hired a Texas-based advertising firm, BJK&E, to come up with a new store image campaign. At the same time, Sally hired another Texas agency to come up with television and radio advertising aimed at Latino customers.

Sally began to court a slightly different group of customers beginning in the mid-1990s, when it developed a new subsidiary, its Beauty Systems Group. Sally stores were open to the public, though most of its customers were beauty business professionals, who received a special rate. Beginning in 1996, Sally bought three midwestern chains which sold only to salon owners. These were Barnum Beauty Supply, of Cleveland, Ohio; Victory Beauty Supply, a Chicago chain; and Locklear Beauty Supply, based in Rochester, New York. Because these stores, and others that became part of the Beauty Systems Group, sold only to store owners, they were able to stock some products that had previously been kept out of other Sally outlets. Some well-known hair care lines, including Redken, Nexxus, and Matrix, sold only through beauty salons. These lines had not been sold through Sally stores. The Beauty Systems Group stores, which were known as full-service stores or "professional business" units, were able to sell Redken and other salon-only product lines. Alberto-Culver's president Howard Bernick, the son-in-law of founder Lavin, told WWD (October 24, 1997) that he believed Sally's professional business division alone could one day bring in $500 million. This was at a time when Sally's worldwide sales were $880 million. Bernick also told WWD that he believed Sally "can and will be a $2 billion to $3 billion entity in the next five to ten years."

This may have seemed an extravagant aim, yet nothing seemed to get in the way of Sally's continued growth and prosperity. By 2001, the Sally Beauty chain had grown to 1,900 stores in the United States. The Beauty Systems Group was a fast-growing subsidiary, with 265 professional-only stores. As the market slowed down for regular Sally Beauty outlets, the professional business group found more locations. Its stores were concentrated in the East, Southeast, and Midwest, meaning there were still many possible markets in other regions. Sales chain-wide passed the billion-dollar mark in 2000, and the company invested $5 million to renovate and expand its corporate headquarters in Denton. More and more, Sally Beauty was recognized as the engine behind its parent's success. Alberto-Culver, a public company that was still run by members of the founding Lavin family, had had ten straight years of record sales and earnings growth by 2002. In that year, Sally contributed 60 percent of Alberto-Culver's sales and some 70 percent of the parent's profits. Though Alberto-Culver's consumer goods division, which consisted of hair care brands and several other niche products, saw its sales go up and down, Sally was a consistent earner. Even as the economy in the United States went into recession after 2000, Sally showed its solidity. As the economy dipped, women's visits to beauty salons also dropped off. Nevertheless, Sally's Beauty Systems Group did well despite poor conditions. "We've never been as large in that business during a recession as we are this year," Alberto-Culver's CEO Bernick told Institutional Investor in January 2002. For Alberto-Culver, the recession meant "a fantastic pickup in the Sally business." So the two Sally business groups balanced themselves out.

With worldwide sales approaching $2 billion in the early 2000s, the Sally chain planned continued growth. In 2001, the Beauty Systems Group bought a competitor called Armstrong-McCall. Sally's parent limited its acquisitions in 2002, investing less than $20 million in purchases that year compared to almost $145 million in 2000. However, the parent realized that strategic acquisitions had worked extremely well for it in the past. By 2003, Sally had more than 2,750 retail outlets in total. The company's presence in Europe and Japan was still relatively small, though Sally had at one point planned to have hundreds of stores in its foreign markets. Perhaps in the coming decades international growth would rival Sally's domestic growth in the 1980s and 1990s. The Beauty Systems Group also seemed to be a growing market, one that harbored the potential to make Sally Beauty into an even larger worldwide presence.

1. Introduction
2. Modest Beginnings in the 1960s
3. National Growth in the 1980s
4. International Growth in the 1980s and 1990s
5. Changes in the Late 1990s and After
6. Principal Subsidiaries
7. Principal Competitors
8. Further Reading
9. Copyright Page
10. About Page