Sally Beauty Consumers Focus On Self-Expression

An emphasis on self-expression following the COVID-19 pandemic is driving customers to extend purchases of hair dyes, particularly brighter colours, executives at magnificence provider Sally Beauty stated on Thursday (July 29), pushing the corporate to robust gross sales development in its third quarter.
Purchases of vivid hair colours are centered on Generation Z clients, CEO Chris Brickman stated, however Sally Beauty has seen customers of all ages, together with these of their 70s and 80s, utilizing brighter colours. “I simply suppose there’s a want for self-expression that’s driving this, and a sense, like, hey, , I ought to be free to do what I would like, the place I work, the place I’m going to highschool, no matter,” he stated.
Officially, consolidated internet gross sales reached over $1 billion within the three months ending June 30, with same-store gross sales rising almost 45 p.c 12 months over 12 months. Sally’s hair colour class elevated 36 p.c in comparison with 2020, and vivid colours grew by 52 p.c within the U.S. and Canada.
Other classes additionally noticed jumps as customers returned to pre-pandemic patterns: Haircare merchandise have been up 74 p.c and nail merchandise have been up 47 p.c at Sally Beauty. Haircare was up 65 p.c at Beauty Systems Group (BSG), the division that sells on to licensed magnificence professionals.
Brickman expects shopper demand for vivid hair colours to proceed, with a brand new Sally Beauty vivid colour line slated to launch later this calendar 12 months. While vivid hair coloring makes up simply 10 p.c of the general hair colour enterprise within the U.S., it includes 29 p.c of the hair colour enterprise for Sally Beauty.
“I say there’s loads of headroom for vivid colour to develop, and Sally’s simply change into the vacation spot for it,” the CEO instructed analysts and buyers. “And it’s nice as a result of it’s good to see that we’re over-indexing now with Gen Z customers who’re coming into that class.”
Expanding Omnichannel Capabilities
Sally Beauty has spent the final a number of years upgrading its whole working infrastructure, efforts that have been accelerated as COVID-19 bore down final 12 months.
The retailer goals to have eCommerce gross sales make up 15 p.c of its whole gross sales quantity within the coming years; final quarter, digital gross sales reached $71 million, roughly 7 p.c of Sally’s whole internet gross sales.
Sally just lately started testing speedy supply at Sally Beauty shops, which is ready to increase within the subsequent one to 2 quarters, and now has speedy two-hour supply throughout its BSG footprint.
Sally Beauty can also be within the early phases of lowering its retailer portfolio, with the corporate at the moment experimenting with the closure of 70 Sally Beauty places and 20 BSG places to see how customers react and whether or not gross sales switch on-line or to a different retail location.
“We have a major alternative to proceed leveraging our digital capabilities whereas optimizing the shop portfolio to ship a superior omni expertise for the client,” Brickman stated. Once the corporate has extra knowledge about how retailer closures impression gross sales, probably in November or past, the CEO stated the retailer will cement what number of of its 5,000 Sally Beauty and BSG places to shut.
Speed is of the essence for Sally Beauty’s omnichannel makeover, as bigger retailers embrace the post-pandemic magnificence pattern with new shop-in-shops and sweetness partnerships. Many magnificence manufacturers are more and more targeted on direct-to-consumer (D2C)  gross sales, which may go away brick-and-mortar-based Sally Beauty behind if digital gross sales don’t choose up.
Uncertainty Ahead
With the COVID-19 Delta variant making headlines and spreading quickly around the globe, Sally Beauty is anticipating its fourth-quarter internet gross sales to be comparatively flat in comparison with each 2019 and 2020.
Additionally, the corporate has been coping with persistent provide chain points, inside each its manufacturing provide chain and the transportation traces from distributors. Brickman expects the state of affairs to “be much more aggravated” within the subsequent 4 to eight weeks, particularly as many retailers start loading up for the vacation buying season, placing extra stress on an already backed-up provide chain community.
“We’ve been making loads of progress all through this quarter, and our fear is that it’s going to be more durable to make progress and preserve service ranges this quarter,” Brickman stated. He added that he expects the Delta variant to be extra of a problem for Sally Beauty in August and September than it has been in July.
Sally Beauty at the moment has a market capitalization of $2.5 billion. Shares of the corporate have risen 69 p.c 12 months to this point in comparison with the S&P 500’s 17 p.c rise over the identical interval.
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