Out Of My Mind On A Wednesday Mornin’

What is your favorite Thanksgiving dessert?

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Sally Beauty Holdings (SBH) reported their latest quarterly results last week. The results were dismal enough to send the stock to a 52-week low. Is SBH a victim of the pro beauty industry, Amazon, terrible business plan or a combination of all three?

I recall vividly back in 1991 CND cut us off because full-service distributors didn’t like us shipping into their territory. Same thing occurred in 1997 with OPI. Back in the day full-service distributors ruled the world with exclusive distribution agreements that made them financially secure for life. Competition was non-existent.

During this time, Sally was buying OTC beauty suppliers . Sally grew quickly through acquisitions and became the dominant beauty retailer well before Ulta opened its first store. While Sally was creating a monopoly in its niche, the then CEO decided to start a new division that would eventually dominate the pro beauty side by acquiring as many as full service distributors as possible. Hence the creation of BSG/Cosmoprof. (L’Oreal got into the game late as it didn’t want BSG to control its brands so it started Salon Centric to compete and bought as many full service distributors as possible as well).

Fast forward to today and what to do we have? While Sally has more than 3000 stores, Sally’s business is declining. BSG/Cosmoprof is flat and that is with its monopoly on key hair care brands. In what used to be equal number of stores to DSC’s, stores are now more than 2/3 of the mix. Meanwhile virtually every distributor has been bought so growth is not an option through acquisitions.

Some say Amazon will buy SBH to get a foothold into the beauty business. Then again, anything is possible as Amazon ponders getting into medical/dental distribution, auto parts, fresh food and just about any business that has margin it can eat. Perhaps a more intriguing question to ponder is the fate of SBH the fate of the pro beauty business? One clue: The demise of DSC’s.

One thing is certain, SBH is in survival mode. Look no further than their email blasts advertising new lower prices, BOGO’s, 25% off everything and a deal of the day that makes one ponder what their pricing strategy really is. And here is the thing about today’s economy: No one cares if SBH survives or not, their products will always be available somewhere else with free shipping and two day delivery, sooner or later.

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Thanksgiving is tomorrow and my favorite holiday of the year. Plenty of great food, family fun, sports on TV and the Turkey Trot. But what about Black Friday this year? Never before have so many retailers advertised weeks in advance their Black Friday deals. Add to the fact that there are no must have gifts this year, it’s going to be a shootout on the OK Corral. Who is going to win? Walmart for sure, the rest, we will see. Cyber Monday? Who else but Amazon? We are more conditioned to buy from Amazon than at any other time even with the economy firing on all cylinders. 2018 will certainly be a watershed year for many retailers. And as far as football goes, does Detroit have a chance against Minnesota?

I just got done watching Big Little Lies on HBO. The story focuses on parents in Monterey, CA that have first-graders. Who knew how much drama could come from six-year olds. No wonder stress and high blood pressure is at an all-time high.

And yes just in case you were wondering, pumpkin pie is still my favorite Thanksgiving dessert, candied sweet potatoes favorite side and a little dark and white turkey with a touch of gravy makes the perfect plate.

Enjoy!

Cosmoprof 2009 Recap

 

If there was a tell-tale hint of how Cosmoprof Vegas was going to be after Cosmoprof Italy back in March, the results speak for themselves:

Down, down and down.

Exhibit space down at least 25%. Attendance down at least 30%. New suppliers down at least 50%.

In the end I didn’t walk away with a single new item that got me excited. Sure, there were a few items that were unique and will sell here and there but nothing that indicated that this industry is on the verge of turning around.

This suits corporate America and private equity just fine. They just assume book a suite at the Four Seasons and meet in private. This way they don’t have to deal with exposing their products to people that couldn’t buy them anyway. Plus the cost savings are terrific and the food is better.

In the end, this show has become nothing more than the ability to meet several existing suppliers in a couple days, shake hands, comment on the show (always the same comments), have breakfast-lunch-dinner meetings and wonder why the show exists.

One thing Cosmoprof Vegas does well is intimidate those that attend. Once you are pre-registered and receive your confirmation, you have to walk a mile to get your badge. You must present a business card and photo I.D. If you forget either, you have to walk a couple miles to fetch. Then you have to walk to the badge holder booth and present more I.D. Then to get into the show, you have to present your badge and hope that their "Navy Seals" security force armed with barcode readers correctly reads your badge or else. At least in Italy you have to just insert your card into a machine and your free. I guess they don’t have enough attendees to afford that here.

Cost savings were evident virtually everywhere. Gone were the espresso machines, bottled water, sandwiches, snacks and other fun things. I did manage to snag a few M&M’s at the OPI booth.

I felt sorry for the suppliers that had to endure three days of torture. Yes, they signed up for it but you have no idea how painful three days can be sitting on a hard chair for 8 hours. When someone finally recognized me, they were so happy to spend a few minutes off their chair they even offered better discounts!

I can’t wait for next year. . .

Happy Wednesday!