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Sally Beauty Holdings, Inc. Announces Fiscal 2013 Third Quarter Results

Sally Beauty Holdings, Inc. (NYSE: SBH) (the “Company”) today announced financial results for the fiscal 2013 third quarter. The Company will hold a conference call today at 10:00 a.m. (Central) to discuss these results and its business.

“Our fundamental business drivers are solid and we remain confident in the long term health of our business,” stated Gary Winterhalter, Chairman, President and Chief Executive Officer. “During the third quarter, customer traffic at our BSG and Sally International businesses was healthy; however, store traffic from the non-Beauty Club Card customer in the Sally U.S. business was soft. We’ve launched several initiatives specifically to address this customer and remain optimistic that traffic will recover over the next few months. On a consolidated basis, we improved SG&A leverage by 50 basis points and grew earnings per share by 13.5%. During the third quarter, we purchased $94 million or 3.1 million shares of our stock. As of the end of June we had $559 million remaining on our current authorization.”

FISCAL 2013 THIRD QUARTER FINANCIAL HIGHLIGHTS

Net Sales: For the fiscal 2013 third quarter, consolidated net sales were $912.1 million, an increase of 2.8% from the fiscal 2012 third quarter. The fiscal 2013 third quarter sales increase is primarily attributed to the addition of new stores, which contributed 150 bps of sales growth. The impact from changes in foreign currency exchange rates in the fiscal 2013 third quarter was not material. Consolidated same store sales in the fiscal 2013 third quarter grew by 0.7% compared to growth of 5.2% in the fiscal 2012 third quarter. Same store sales growth was negatively impacted by lower non-Beauty Club Card traffic in the Sally U.S. stores and difficult comparisons against strong growth in certain product categories in the Sally U.S. business.

Gross Profit: Consolidated gross profit for the fiscal 2013 third quarter was $457.1 million, an increase of 2.9% over gross profit of $444.4 million for the fiscal 2012 third quarter. Gross profit as a percentage of sales was 50.1%, flat when compared to the fiscal 2012 third quarter.

Selling, General and Administrative Expenses: For the fiscal 2013 third quarter, consolidated selling, general and administrative (SG&A) expenses, including unallocated corporate expenses and share-based compensation, were $295.7 million, or 32.4% of sales, a 50 basis point improvement from the fiscal 2012 third quarter metric of 32.9% of sales and total SG&A expenses of $291.5 million. Fiscal 2013 third quarter SG&A expenses increased 1.4% or $4.2 million. This increase is primarily due to expenses associated with the opening of new stores, the Sally Beauty Supply point-of-sale system conversion and the implementation of our International ERP system.

Note: SG&A expenses include unallocated corporate expenses, as detailed in the Company’s segment information on schedule B.

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