Sally Beauty Holdings Inc. said it wants to speed up efforts to improve its store portfolio by closing 350 Sally Beauty Supply locations and two distribution centres by the end of the year.
The company said that the optimization plan will save Sally Beauty Holdings about $50 million in costs during its fiscal year 2023, which is expected to add about $10 million to the company’s adjusted operating earnings.
Sally Beauty (NYSE: SBH), which is based in Denton, Texas, said in an announcement of its quarterly results that it has been testing store closures in different markets for the past few quarters and has seen positive sales recapture rates and better profitability in those markets.
The company said that most of the stores that will be closing will be Sally Beauty stores in the United States. The company also said that two distribution centres in Oregon and Pennsylvania will close in December. Their products will be moved to larger distribution centres.
As part of its optimization plan, Sally Beauty said that it had to pay a $45.5 million charge in the fourth quarter of 2022, which ended on September 30. This charge included a non-cash inventory write-down of $19.4 million.
The company had net sales of $3.8 billion, gross margins of more than 50%, and adjusted EBITDA of more than $500 million in fiscal year 2022.
In the 2022 fiscal year, Sally’s president and CEO, Denise Paulonis, said that despite the “highly dynamic and challenging macro environment,” Sally’s teams “performed well, navigating inflationary pressures and supply chain headwinds while staying focused on serving our customers.”
Sally Beauty Holdings Inc. runs mostly through its two business units, Sally Beauty Supply and Beauty Systems Group. There are more than 3,700 Sally Beauty Supply stores around the world.
The businesses Sally Beauty Supply and Beauty Systems Group sell and ship products to more than 5,000 stores, including 180 franchises, in the United States, Puerto Rico, the United Kingdom, Germany, the Netherlands, Belgium, Canada, Chile, Mexico, France, Ireland, Spain, and Peru.
The Beauty Systems Group business has more than 1,300 stores, including 164 franchised stores, and a network of more than 800 sales consultants in North America who sell products to professional stylists and salons to use and sell to their customers.
