Product and Service

Companies included in beauty supply retailer sector in personal care industry primarily are retailers and distributors of beauty supplies including hair color, hair care, styling, skin, and nail care products for consumers and professional salon.


Demand for Product and Service

As indicated by typical sales data, the demand for discount merchandise has been very strong and growing quickly in the past several years. It seems that sales performance of companies have been increasingly related to the performance of their lower pricing items. Developing new areas/stores also plays more important role in companies’ performance in in-store sales.

The Sector

Sector’s Current, Trend, Causes behind trend, and Future

Current and Trend
  1. Generally, demand, from both personal consumers and professional solon, for products/service of companies in sector has been solid in the past several years.
  2. The performance of retailers in this sector has been negatively impacted by the slowing down mall/store traffic in the past two years as indicated by the fact that same store sales has gone down as a result of less traffic.
  3. There is a sign indicating that the downturn trend in traffic and same store sales is getting worse after 2017 because it seems that promotion and lowering price cannot help offset the decreased sales resulted from decreased traffic.
  4. Fast growth in sales of e-commerce, as indicated by some companies’ data, also proves that there is a solid demand for products and service of companies in this sector and that the downturn in retailers is only because the traffic has not gone to physical stores.
Causes behind the trend
  1. Economy and demographic factors have helped drive growth in demand for beauty products and service.
  2. The slowing down traffic in mall/stores across retail industry is probably only a result of shifting of transaction to online stores.
Industry Future
  1. Supported by favourable factors from macro-economy and demography, demand in this sector may continuingly go up but the performance of companies may depend on their business flexibility to adapt changes in shopping habit of consumers.


General Financial Performance of Companies In the Sector

It seems that demand for products and service of companies in this sector has been solid as indicated by the growth in the same store sales (average 3-8% annual rate) in the past three years, which can be attributable more on increasing transaction size than increasing transaction. However, when come to the individual retailers companies in this sector have performed differently since 2017 as seen from their slowing down store traffic. Some of companies’ sales of store went down largely due to slowing down traffic. E-commerce has grown very fast (50-60% annual growth rate).
The average gross margin from the typical companies is about 43% in 2017. The typical operating margin is now at about 13% with a SG&A as percentage of sales of about 29%.
The typical average stock Price/cash flow ratio is: 17 (interest/EBI ratio of 18%) and stock price/sales ratio is about 1.4.

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