Hair stylists and colorists, manicurists, and cosmetologists stock up at stores operated by Beauty Systems Group (BSG). The beauty supplies distributor operates about 995 company-owned CosmoProf stores, open only to the beauty trade. The company also supplies more than 150 franchised Armstrong McCall shops, and distributes products directly to salons through a sales force of more than 1,100 professional consultants. Customers primarily include salons, spas, licensed beauticians, and nail technicians. Its 10,000 products include brands such as Paul Mitchell, Wella, and more. BSG, which covers all 50 US states, Puerto Rico, and parts of Canada, Mexico, and Europe, is a subsidiary of Sally Beauty Holdings (SBH).
BSG, which accounts for more than a third of its parent company's sales, has grown its sales force and store base in recent years, adding about 275 shops and more than 100 professional consultants between fiscal 2011 (ends September) and 2007. Fiscal 2011 sales increased 16% over the year earlier period and profit margins widened. While both BSG and SBH's Sally Beauty Supply retail business have experienced strong growth since separating from Alberto-Culver in late 2006, BSG outperformed Sally Beauty in terms of sales and profit growth in 2011.
Contributing to BSG's strong performance in 2011 was the acquisition of Aerial Company, a beauty products wholesaler with two distribution facilities and about 80 stores in the Midwest, for $70 million in late 2010.
As a distributor, BSG is dependent on its suppliers for product and its business is vulnerable to changes in those relationships. One such change was the loss of its exclusive distribution rights to L'Oreal USA professional products, although BSG retained its non-exclusive rights, in 2007. Consequently, L'Oréal, one of BSG's largest suppliers, is also now a direct competitor of the company. – less