Sally Beauty loses CEO, incurs $1.1M cost from data breach

Sally Beauty Holdings (NYSE: SBH) on Thursday reported a 10 percent decline in profit during a tough quarter that saw severe weather and a data breach of the company's payment system.

The beauty supplier also incurred a charge of $1.1 million in connection with the cyber attack in late February that affected 25,000 credit card numbers.

Sally did not go into detail about where the $1.1 million went, but if history is any indication, the retailer paid for technology services, additional customer service support and fees associated with offering credit monitoring and updates to consumers. A data breach is also likely to cause a drop in traffic to the store as customers become nervous about the safety of their payment credentials.

Separately, Sally announced its plans to bring on a new CEO next year to replace Gary Winterhalter, who's stepping down April 30, 2015. He will stay on through January 2018 as executive chairman of the board.

Former Kimberly-Clark International President Christian Brickman has been appointed president and COO effective June 2, and will transition to the top post after Winterhalter assumes his new role. The board has outlined a plan to have Brickman eventually transition into the CEO job.

For the second quarter, Sally reported a profit of $58.5 million, a 10 percent drop compared with a profit of $64.9 million, a year ago. Total sales were up 2.4 percent to $919.5 million. Same-store sales increased 1 percent.

Sally's losses, although bleak, fare better than Target (NYSE:TGT), which reported a 46 percent decline in fourth-quarter profit, as costs related to its data breach during the holiday shopping season weighed on the retailer's earnings. Target was hit with $61 million in quarterly expenses from the breach. U.S. banks also spent $153 million cleaning up Target's mess according to data from the Consumer Bankers Association. Over 15.3 million bank cards had to be replaced and banks had to pay for extended branch hours and additional customer service staff in the breach's wake. Many banks also had to reimburse customers who lost money when their stolen card numbers were used for unauthorized purchases.

For more:
-See this Sally Beauty press release
-See this Sally Beauty press release

Related stories:
Sally's data breach possibly affected up to 280,000 customers
Target: Timeline of a data breach
Target's data breach is a story with long legs
Target breach: Heating vendor confirmed as hackers' entry point
Target to install chip and PIN card readers, says that only 25 registers were to blame for massive breach

Suggested Articles

Costco changes up its menu items, and Alibaba and Guess partner for a physical store.

Janey Whiteside, Walmart's new chief customer officer, is well acquainted with the importance of customer service in modern retail.

Whole Foods will offer deals on Amazon's Prime Day, and tariffs against China are causing pricing hikes.