Sally Beauty Supply is on the move but do they know how
Steve’s breakdown: These folks are going to be advertising “for real” very soon but they have no experience – not to mention the lack of digital communications.
Worth a shot!!
DENTON, TX: Sally Beauty Holdings observed a major milestone recently with the opening of its 5,000th location, but the $3.8 billion Texas-based retailer has even bigger ambitions for more stores and new services as it vies for market share with mass and specialty players.
Sally Beauty’s newest store in the Presidio Towne Crossing shopping center in Fort Worth, a short drive south from the company’s headquarters in Denton, Texas, was designated as the 5,000th location, but that distinction promises to be fleeting judging from the company’s growth aspirations. Plans call for the company to grow its store base by approximately 3% for at least the next few years, which could translate into roughly 800 new stores over the course of the next five years. That would be an acceleration from the past five years when the company increased its store count to 4,967 units at the end of its fiscal year on Sept. 30, 2015 from 4,309 units five years earlier.
Beyond expanding its footprint, Sally Beauty is looking to increase the productivity of existing locations with merchandising and operational moves designed to shore up deficiencies relative to competitors like Sephora, Ulta and the broad range of mass market and department store players. For example, to reframe and reposition the Sally brand to be more meaningful to the next generation of consumers, the company said it refreshed nearly 1,000 of its stores by installing new flooring, lighting and signing. The refresh store experience also included the addition of interactive “nail studios” and “eyelash and brow studios.”
Another 500 stores are slated to receive physical improvements this year, including the addition of hair color and hair solutions studios at 3,000 U.S. Sally Beauty Supply stores, a logical move considering stores generate 46% of sales from the hair care and hair coloring categories. The company also implemented a new point-of-sale upgrade and is in the process of rolling out a standardized enterprise resource planning (ERP) system.
Sally Beauty has a lower profile in the beauty industry compared to some of its competitors due to the location of its small stores (average size of 1,700 sq. ft.) in strip centers and lack of advertising, but that could be changing as a new campaign kicks off to promote awareness and generate traffic to a sizeable store base.
The company operates through two segments, Sally Beauty Supply stores that serve retail customers and salon professionals and Beauty Systems Group, or BSG stores branded as CosmoProf or Armstrong McCall, that employ nearly 1,000 sales consultant focused on serving salons. There were 3,655 Sally Beauty Supply stores averaging about 1,700 sq. ft. and 1,294 stores in the BSG segment, at the end of the most recent fiscal year. The Sally Beauty retail stores stock about 8,000 products and accounted for about 61% of sales while the BSG professional stores stock about 9,000 products and accounted or 39% of sales during the most recent fiscal year.
“We are off to a solid start for fiscal year 2016,” said Sally Beauty president and CEO Chris Brickman after the company reported first quarter results. “We drove same store sales improvement in our Sally business, and our BSG business continued to grow sales and gain channel share. In addition, implementation of our pricing and margin improvement initiatives resulted in gross profit margin expansion consistent with our previously stated guidance.”
Brickman feels good about the company’s second quarter and full year prospects, but has cautioned that investments in a significant TV campaign to re-engage retail customer will create a modest headwind.