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.
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