Sally Beauty Company, Inc. - Modest Beginnings in the 1960s

Modest Beginnings in the 1960s

The Sally Beauty chain, now worldwide, began as a single store in New Orleans, Louisiana, in 1964. The shop, located on Magazine Street, sold beauty supplies and equipment to registered beauticians. The original owner franchised the idea, and within five years there were 12 Sally Beauty stores in the New Orleans area. The chain might have stayed a modest regional phenomenon if it had not been discovered by Leonard Lavin, chief executive of the Alberto-Culver Company. Alberto-Culver began as a Los Angeles beauty supply company, Blame Culver, which made hundreds of shampoos and beauty products, including Alberto VO5 Conditioning Hairdressing. In 1955, Leonard and Berenice Lavin bought the Los Angeles company and moved its headquarters to Chicago. The Lavins revamped the company, discontinuing most of its product lines to focus on Alberto VO5, which had been developed by a chemist at Culver specifically for Hollywood movie stars. Lavin was traveling in New Orleans in 1969 when he was intrigued by Sally Beauty. It offered a new way to distribute hair care products. At the time, most large hair salons were serviced by traveling salespeople. Some of the best-known names in the U.S. beauty business started out door-to-door, including Charles Revlon and Vidal Sassoon. Nevertheless, the salon sector was and remains extremely fragmented, and so this kind of distribution was patchy at best. In New Orleans, salon owners could go to a Sally Beauty store and buy directly the shampoos, dyes, and lotions they needed. Leonard Lavin thought the Sally Beauty chain was a great way to sell hair care products, so Alberto-Culver bought the company for around $1 million.

Sally Beauty was not an immediate success for its new owners. In 1972, Alberto-Culver gave management of the division to Michael Renzulli, a trained pharmacist. Renzulli described his early years with Sally to the Dallas-Fort Worth Business Journal: "I served as a Jack-of-all-trades, traveling from store to store with beauty products in a station wagon." The chain did not make money, and Renzulli decided to discontinue the franchise arrangement. The company bought out the franchisees and ran the retail outlets itself. Still, another Alberto-Culver executive described the early Sally in Institutional Investor (January 2002) as "very problematic for most of the 1970s." Despite some discouragement, the chain did grow, and by 1980 it had evolved into a company-owned chain of almost 40 stores. Revenue increased, and Sally began to make a profit. At that point, the chain began to grow through acquisitions.