Is Sally Beauty closing stores in 2023? Sally Beauty Holdings Inc. stated that it plans to increase efforts to streamline its shop portfolio. They declared they would be closing several Sally Beauty Supply stores and two distribution facilities.
To increase profitability, the firm stated that it would close about 350 locations in December 2022. The United States will see the majority of store closings. Currently, the company runs more than 5,000 locations globally, with about 4,500 in North America.
Sally Beauty Holdings announced consolidated net sales of $962.5 million for the fourth quarter of 2022. Compared to the same period in 2021, there has been a 2.8% decline. The company blamed its disappointing results on supply chain issues and rising inflation.
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Is Sally beauty going out of business?
People looking for salon-quality hair without the hefty price turned to Sally Beauty. Anyone can purchase professional beauty items from this well-liked retail chain. As a result, it has become a go-to for those who want to color their hair or get their nails done without going over budget. But our upcoming at-home manicure or dye job may suddenly be at risk. 350 Sally Beauty locations will close, the company reported.
2022 was a complex year for Sally Beauty. Foot traffic at Sally Beauty Supply was consistently over 100,000 until 2021. Thus, it started to fall in May of 2022 and has since begun to decline. As reported by the beauty news outlet, the retailer recorded a total of about 89,500 in-store visitors in August, representing a significantly smaller number of customers than a year earlier.
Sally Beauty is primarily targeted at lower-income customers who have switched their spending toward basics like gas and groceries due to the growing cost of living. The cosmetics firm now seeks to address these issues using a new tool called closures.
Sally beauty closing stores
Sally Beauty Holdings Inc., the parent company, published a new report on November 10. It summarized the business results of its 2022 fiscal year, which concluded in late September. The company’s annual net sales decreased by 1.5% based on the information.
Sally Beauty will implement three significant measures as the 2023 fiscal year begins. This is to enhance its business results, according to CEO Paulonis. One of these initiatives is to make Sally Beauty Holding Inc.’s operations more effective, which involves changing its store footprint.
Sally owns and runs more than 2,000 retail locations. These can be found in Mexico, Puerto Rico, the United Kingdom, Japan, and Germany, and all over the United States. Five thousand distinct goods, including hair, skin, and nail products to high-end beauty supplies, are available at Sally Beauty locations.
The latest report states, “the business is advancing its store optimization plan, along with the closure of around 350 locations.” They stated that most of the shop closings will begin in December 2022 and will mainly affect Sally Beauty stores across the country. There are currently 3,439 Sally Beauty Supply locations worldwide, but the firm did not specify which stores will be closed.
As part of its strategy to “maximize the potential of its big store portfolio and create a smooth omnichannel experience for its customers,” Sally Beauty said the closures are taking place. To move the quantity to larger distribution centers, the hair and beauty supplies retailer will also close two minor distribution locations in Oregon and Pennsylvania before the end of 2022.
Sally beauty’s optimization plan
According to Sally Beauty, the fourth quarter of 2022, which concluded on September 30, saw the firm take a $45.5 million charge. It was a part of the optimization strategy, which included a $19.4 million non-cash inventory write-down. The corporation had adjusted EBITDA of more than $500 million, net sales of $3.8 billion, and gross margins of far more than 50% in the fiscal year 2022.
Sally’s teams “performed successfully, overcoming pricing pressures and supply chain difficulties while keeping focused on serving our clients,” according to Paulonis, CEO. He noted that it happened in the 2022 fiscal year, among all the challenges of a highly dynamic and challenging economic environment. Sally Beauty Holdings, Inc. principally functions via two product lines: Sally Beauty Supply and Beauty Systems Group.
Sally has more than 5,000 stores, including 180 franchised ones, in the United States and Puerto Rico, the United Kingdom, Belgium, Canada, Chile, Mexico, France, Ireland, Spain, Germany, the Netherlands, and Peru. Those stores comprise the consolidated sales and distribution networks for Sally Beauty Supply and Beauty Class’s businesses.
In North America, the Beauty Systems Group company operates more than 1,300 locations, including 164 franchised locations. There is also a network of more than 800 sales consultants that offer items to salons and experienced stylists for use by and resale to their clients.
Beauty supplies closed
In 2022, the company already shut down a few Sally Beauty Supply locations. Over the past year, the business shuttered over 110 of the retailer’s locations. Many of the closed stores were spread.
Across the United States. The McDonough County Voice reported that a Sally Beauty Supply store in Macomb, Illinois, permanently closed its doors in June. According to the Peninsula Chronicle, one of the retailer’s locations in Gloucester, Virginia, shuttered this fall.
Thus as part of its shop optimization plan, the business has decided to close 350 sites. This decision was made “based on high sales recovery rates and enhanced profitability” in the markets where smaller store reductions were tried.
Thus, the company estimates that its optimization plan will save costs by about $50 million while also increasing sales. Sally Beauty Holdings Inc. stated, “We remain optimistic about the reconstructed foundation of the business and are thrilled about the possibilities of our new strategic priorities.” As the company capitalizes on these advantages, they anticipate that the external environment will continue to be complicated. Particularly the inflationary pressure is negatively affecting consumer spending patterns and causing higher labor costs.
Conclusion
There were some positive aspects: Sally Beauty announced that global e-commerce sales increased 30% year over year to $90 million, or 9.3% of the company’s net revenues for the quarter.
Sally Beauty will close physical stores, but it is developing more digital and engaging products in the hopes. Thus, they will lead to low- to mid-single-digit net revenue growth. Denise Paulonis said in a statement, “We will be working against three strategic goals that will serve as the basis for us to inspire a more colorful, confident, and inviting world.”
Paulonis wanted to make the company more customer-focused. The plan consists of a broader range of support services for their stylists and better training and experience to uplift and assist all clients. He claimed they are expanding their portfolio of high-margin-owned brands under the Sally name, amplifying innovation, and boosting operational effectiveness. They will also enhance the company’s commitment to diversity, inclusiveness, and belonging and their own ESG goals through optimization plans.
Refferences:
- https://www.globest.com/sbm-gbst/2022/11/22/ sally-beauty-supply-closing-350-stores/?slreturn=20230003010020
- https://chainstoreage.com/sally-beauty-closing- hundreds-stores
- https://www.retailtouchpoints.com/topics/ market-news/sally-beauty-to-close-350-stores-by-year-end
- https://bestlifeonline.com/ sally-beauty-closing-stores-news/