SBH - Earnings call transcript Q2 2021 | Sally Beauty Holdings, Inc.

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Operator

Ladies and gentlemen, thank you for standing by and welcome to the Sally Beauty Holdings Second Quarter 2021 Earnings Call. At this time, all lines are in a listen-only mode. [Operator Instructions] I would now like to turn the conference over to Mr. Jeff Harkins. Please go ahead.

Jeff Harkins

you. Thank everyone. morning, Good joining for us. you Thank the With President Officer. are Brickman, today Chief me Executive Financial on and Chief Officer; Chris Cormier, call and Marlo

of we within XXXX. at The on as be viewed we of other recent XX-K the views as everyone remind link this forward-looking release of available to provided represent results you our these I Litigation would measures factors, call its on we the statements obligations from meaning Form remarks explanation today’s made only with Report investor undertake forward-looking its a also non-GAAP on Securities site to for by can a of presentation management’s materially that I filings statements Before our call Reform a differ most that no contain that today Act Exchange important update discussed Actual made website. and Factors those on including may Commission. reconciliations press call its and Annual provided earnings our indicated Securities in various and start, sallybeautyholdings.com/investor-relations. want have from remind adjusting Private the company the may result those and of the statements forward-looking this in Any detailed financial items has on and in section Risk like of them. to

to turn over formal the Chris to like call begin I’d to Now, remarks. the

Chris Brickman

I the during our for to teams morning you, business Thank commending Jeff, times. remarkable their good want to by everyone. start and these commitment

environment continue and operate certain store easing see with added requires that to we restrictions, pleased to in all and markets, global but the dynamic and remains discipline, agility. We’re closures

in net serving and international level customers. achieve to continue a the and at growth of and on salons stronger January. performance store closures of P&L. trends, There to importantly, Traffic the the factors quarter, final most started teams drove of in our of than territories, sales more Our many February, picking in accelerated the they in and dedication, the top-line. despite Due a their up key part remain we focused that few in across of sales California work substantially X% in resulting QX, hard expected the latter our are high and shutdown month perform

we consumer confidence, government stimulus First, U.S. improving and actions. demand saw increased from Sally and

up reopenings and Next, in restrictions demand, both stronger in Canada, and Sally U.S., pent than the easing drove BSG. expected as

early a may have As the in QX Ontario this but of again seen you dynamic. is shut April, Province down subsequently

the booth sweet at level allowed store target margins The are to and quarter. moved of strong strategy, we stylists BSG to combination shift Lastly, capacity more gross to of promotional in stylists, month continue quarter, to or the permitted in rental, final these the customers. saw the above demand XX% higher to were of their and our increasingly likely effectiveness displaced solid are they as at salons from of our trend salons become same the operate maintain time, independent us we At significant BSG in consumer see a levels. a towards as trend

credit of expense to ratio our on our fully flow. the with due outstanding balance bringing our position, million balance Additionally, facility. the the toward the senior repaid end quarter, of X.X cash progress XXXX. on QX a helped zero making and leverage X.X% XXXX, close outstanding goal our cash we drive fiscal by times and the to strong $XXX of close of notes ended earnings Subsequent sheet, also We including favorability liquidity balance million $XXX strong ABL on further

by business the at Looking category.

prior at Sally year. saw Color in Then XX% grew our versus the quarter. increased vivid. in and to XX% color represented important and by including and the the Sally of sales vivid ongoing colors for continued strength total driver During U.S. it color, Canada be XX% an we Canada quarter, and hair U.S.

In prior year. well, styling BSG. progressed, and speaks at up XX% care categories addition, nails performed as which which out at consumer up with confidence U.S. the building. BSG categories Notably, also saw Sally a hair at such Other really saw the vaccine hair XX% was Canada, going versus that quarter core the XX% was Sally and to the also pickup color we improving in strengthen care and up tools, in as category, X% and optimism and up

a Our e-commerce versus sales up of business was increase XX% an delivering driver, ago. growth year important also

capabilities, our this expanded year. see fruit starting our to really we’re digital at Looking investments bear

currently multiple at pickup ship stores. our store, curbside day including same curbside from store pickup online buy options, Sally and fulfillment at offering BSG and We’re pickup and delivery Beauty in

portfolio. of the will number need patterns, a BSG transfer XX a sales macro when testing store will For combined are learnings us range the provide the will be capabilities. customer closely and closures Sally months, future we the initial across small The across to our learnings Sally evaluating will stores, which plans approximately wage end, consist by analyze we with of same digital that highly of which we all At spread roughly fulfilled locations, and key Beauty the markets. enhanced second our as coming of XX% quarter, in portfolio stores, such store are maintain In inform e-commerce and and to store our monitoring with productive inflation sales large country XX to for options. our were with purchasing fulfillment factors for Canada the test that and our approximately value our to various mindful of XX U.S. of of To time, help behavior the and balancing economics. speaks be

major call. on teams outlined earnings fiscal for last priorities Our focused three that XXXX remain the our on we

the As a include following. reminder, those

We to transformation. of our the complete expect substantially elements remaining

to leverage of ratio color our in four mission bring recruit core we priorities, We key expect tools our initiatives. retain and target service expect of debt to on to In support times. and our be and new our we are closer these of working leveraging X.X all to of capabilities customers,

our about I’ll First, model. expanded service talk delivery

are adoption see our Sally an quarter. from sales of rising rates sales Canada’s and up in XX% and XX% profitable for prior which quarter. additional total focus, during We U.S. for QX, the accounted on from of represented XX% e-commerce option, to Canada’s most total e-commerce U.S. fulfillment Sally store the Ship pleased

both begin will our delivery competitive we times and month Next Sally for highly customers. BSG offering same-day

This to second value front-door We half, has believe the commence a to be based on how robust unique pro will BSG Pros a the navigation in two to important our ability I’m we offer this Sally will with be Our been the for you businesses. hours, to our we’ve able be efficiency of product product and to is within options game of replatforming will advantage more June important, high adding In we enhancements BSG the product and schedule slated and which BSG focused terms that competitive stylists initiative its ultimately changer hours. footprint. strengthen month. of be is completed in ability customers the digital and timeframe. their customers this get Salon our on have of tell able store currently pleased loyalty like convenience focus are in A value-added and customers profitability three nationwide new is to improve new to option orders to our as recruit which that reorders, third the platform is engage CRM. features now and A their Equally little to as provide its we’ll second and its with rollout BOPIS, on another of area the stylists. bulk receive storefront,

rewards program card. and relaunched BSG fall private rewards just over may Sally launched our our recall, As just first ago, two loyalty loyalty label with credit program Beauty you we its last years

rollout sales US JDA, step our and X% represents BSG Sally card, U.S. CRM we exceeded we’ve key drive of on increase surpassed of purchasing the from capabilities the the multi-year and total sales tools an reward initiative As fiscal important private and XX% sales. poised The our journey, sales. along and in customer incremental QX continuing of ultimately to and journey. Canada In transformation fourth entire at is added purchases for members XXXX label really which loyalty interaction are layered total

remain really We and which location, strategic with stores to underlying color, continue majority of centricity. the distribution the leader color to To expand This our end JDA relocation in year. the reset is full be the currently initiatives the be the focus to all of every of completed Texas an May. initiative, on in Sally are operations color customer our and to center, track that of of calendar our a of front of mission At functionality end, DCs, all remaining of the offerings North by in at color the our hair core U.S. to stores. the the we executing all bring will that Sally on heart visits included including of puts our

category We new lightning a aisle, specifically over has year. added our skews volume better past to designed four to brands a become brought and create also customers. for color the high dedicated and feet We to new color eight layout a the the and feet which experience blonding,

double-digits, key robust, tempered specifics Consumer we last improves, capacity our context Looking executing is the in fiscal disruptions experienced when the believe the within confidence international are consumer against Notwithstanding in XXXX, by pandemic, the at net strong expecting QX external we are teams categories salon high store remain ongoing from in U.S. are from store our this comparisons growth improving margins reflecting Marlo. well is Beauty as second demand closures business Salon our any to segments we the markets both BSG sales gross expectations the our somewhat and broad-based Sally more our said, on are environment. of closures, core year easy half for That especially the incremental and well-positioned, restrictions in an shortly of primarily strengthening initiatives. the and

I touch call would like the our initiatives. to to turning briefly on Before Marlo, ESG

ESG recognize creation. our they we corporate the foremost, essential in play of and responsibilities, long-term and and the First our value and role importance issues, performance social

data you ESG website. on we inclusion, energy our recently Our was our to in Investor can environment, encourage Relations and our development a and to best detailed and a impact, employees, posted sourcing provides in security. focused our strategy where We five is report, diversity of key practices, meaningful believe view full have view which areas, product protection and the we

Now, the I’ll to then to taking questions. financials, and ask Marlo forward look discuss your we’ll

Marlo Cormier

good morning everyone. Chris you, Thank and

U.S. and deliver versus outperformance the in average X.X%. restrictions Net X.X% actions. the same primarily U.S., during our units The combination We’re Similar to during strong store results other last quarter, government on key the California optimism, the decreased traffic to prior including while latter sales second increased, the quarter. reflects in the reopenings stimulus unit easing sales including were consumer per locations, up transaction, top-line increased year. prior of measures half of pleased across year, ticket. versus average quarter, P&L improving open and retail And salon our

Our sales global strong year-over-year remains basis. e-commerce a consolidated on up XX% business with

We’re to in team work deliver to to line scale perspective, investments plus we’ve pleased our our fulfillment margins particularly new levels. capabilities bear target made continue to XX% digital profit our continue From and a our see deploy enhance fruit, gross tools. and options with the we as

PPE a margin $X XX.X%, excludes last to XX.X% points year. up million, gross margin was gross of Adjusted quarter in came XXX at writedown and basis inventory. Second

serve perspective, position customers our when and open in to help and protect for who build early them steps PPE demand like came items we safely hit us their we to communities For XXXX, could professionals sanitizers. to immediate our a our assist ensure inventory masks, salon gloves, to and pandemic took the in retail businesses associates, in

bring headwinds As demand. line our taking abate, are began in levels to with we anticipated to steps pandemic PPE

accrued of need In million inventory the the made to has of half the on This decision a writedown, million organizations as we approximately $X addition that been XXXX. expensed fiscal balance sheet. second and to during to the SG&A, liability PPE in $XX in portion will donate also disseminated be

subsidy SG&A reflecting That on advertising expense million. an PPE rent $XXX decreased approximately million partially while QX pandemic focused totaled On our persist. $X $XX.X of field costs, SG&A of and credits. labor $X.X expense the by expenses. and million, control basis, and donation Canadian million, offset lower headwinds adjusted to by Turning includes wage

IT, basis as to incremental a last inflation points, adjusted As XX.X%. of and of and marketing sales, XXX the percentage half In compares second by wage at of improved rent abatement. well furloughs year, test spend on SG&A year, increase expect prior reflecting to we in SG&A and as coming versus combination a year’s the dollars the

the on bottom doubled and strong to points to increased than are QX, EBITDA more earnings Turning XX.X%. operating adjusted $XXX to line. top-line expanded XX% In diluted to by basis margin through the Adjusted XXX to flowed $X.XX. million, EPS adjusted performance

strengthened Moving quarter. the results Sally and Beauty the The to a optimism XXX same-store sales stimulus points pickup U.S., margin, operating segment we part latter and at in saw gross drove in Consumer strong expanded of the government increase sales segment significant increased took X.X%. effect basis combination to XX.X%. of margin and expansion sales which during

reopening coupled of sales increased Sally, our year strong a in X.X%, operating on a reflecting a versus higher at BSG salon year-over-year XX% restrictions e-commerce salons growth rebound XX% remained strong store posting delivered with sales ago. up basis. in at February. also same E-commerce California In capacity as strong the ease We and segment,

gross the year, flat XX.X%. operating to XX approximately and PPE last was to Excluding margin write basis of inventory, expanded margin points down

cash balance million, zero end. $XXX ended we credit. fiscal quarter our million donate $XXX to quarter Inventory balance totaled year, inclusive flat of Looking million on at essentially in million the $XXX last to sheet the inventory We flow. the cash and by year at PPE line and sheet expect of that a the with balance $XX revolving in on of

Looking at $XXX inventory to the expect this the million. in the balance year, we fiscal close with year of low

generated X.XXx, expenditures cash we strong rebuilt of is stood in inventory $XX for from the free this hand of with ratio million, purposes, million the As the net $XXX comparison at operations in purposes capital of we capped a and was ratio We on million say, calculation first often $XX the in QX levels putting where At and exited at agreements, impact end defined leverage net loan flow position year. totaled reminder, half quarter, our $XX leverage our XXXX debt cash at as successfully sub-optimal debt our of the cash million. fiscal flow for at that X.XXx.

the Given notes. our our $XXX of strong outstanding on subsequent of quarter balance X.X% end to we position, unsecured liquidity the the repaid fully million

We the X.X bringing cash our year. sheet, to of balance continue ratio expect the to excess with this deleverage goal leverage times to utilizing closer

We business flow requirements of we around on will expect be the more working the this QX fiscal strong than year. operations Based second half the cash to timing flow $XXX of approximately approximately the generate receipts, from anticipate to cash of – capital prior million in operating inventory flat year.

continue We the debt that are growth in maintaining our focus on liquidity balance and to down in near-term. will with pay investments strategic

will Importantly, as value to returning stabilizes, the for macro shareholders. environment paths we evaluate optimal

restrictions again, the closures at dynamic expect we be half we remain of to fluid. environment In incremental in store comparison. second assuming down the no mind easy year, the were up in third QX stated, the are and disruptions. Looking with pandemic and in particularly, year, last as that net to Keep Chris impacts sales pandemic quarter, of reflected closures XX% Against that comparison significant globally. previously which continuing

QX from sales net in strengthening offset expect the consumer reflecting of to XX% headwinds in this by partially of pandemic growth international ongoing U.S., We in year, demand markets. choppiness XX%

at quarter Looking substantially. the normalized comparisons fourth

approximately this that perspective net will flat be In sales down of QX reopenings anticipate the than net in and in took we to QX restrictions For salon XXXX, year. lifted hold. less X%, sales of prior year, were store as compared

stabilize. from appreciate the our our macro sales good about morning. both the We to your continue performance financial net context, our when providing time perspective. we’ll environment, and positioning For sales anticipate and and this of guidance pandemic ability we navigating operational in We an same-store feel to as return view best that measure conditions

call to to like the the questions. operator turn I’d over Now, for

Operator

have line we And of Cowen. Instructions] with go [Operator Oliver – Chen Please ahead.

Unidentified Analyst

as there? curious, Hi. This any our the you strong Oliver improvement cadence so How seeing seen terms you year saw [indiscernible] Thank for just are demand. for haircare taking about then Thanks obviously are you promotional lower candidates is What for [ph] the side? noted And today. this cosmetic year? Joan throughout much. think you the Have we of noted promotional remainder question. I’m the the quarter. you in on thinking you about it

Marlo Cormier

very our remind BSG. and of me less that you percentage even X% a business, let small of less Joan, Sally than Cosmetics than is

So to traffic a continues but it’s that’s it significantly categories business. for said, being be carrying like high That our not as category really color a care category, our and larger us. and down obviously up are

at our we like at In this significant change the terms think, of we’re right so I cadence feel in strategy promotional we strategy, see promotional point. don’t about any

promoting color recruitment shorter more term of than We’re much on customers rather the focused sales.

any don’t of half the back through I the that year. see So change in

Operator

Parikh And from Oppenheimer. our Rupesh next ahead. with questions are Please go

Rupesh Parikh

for Good Thanks question. my morning. taking

first guess, Chris I on So, a great quarter. congrats obviously

some during the look guys As there, especially, related had comp at and quarter clearly, international same the to seamless there you out at we markets. performance restrictions, your severe benefits were but some headwinds time

more As do in think what the saw totality you the guys than like during stronger headwinds cosmetic you than been were tailwind think have like potentially – – you we do quarter? business a guys look

Marlo Cormier

Rupesh, the But hard that really it’s segment Sally at helps. disaggregating and obviously to just you if look Sally disaggregate.

XX.X%. Sally was U.S. So up

a it’s performance the know, huge quarter. in You

that we course stimulus. the result is that overall What of up had of lower some of the Europe course is is optimism happened Some where of significant results that X.X%. segments and shutdowns in

all some played optimism, some delivering headwind again, its very performance stimulus. the to but is Sally U.S. you’re an hard they It’s So and those right of basis you of down a international see demand XX.X%. XXX by it is of exactly some incredible disaggregate of And dragging of points. role. Sally that

Rupesh Parikh

believe the Beauty BSG share or in share from Great. from in during guess a, the quarter? whether a segment And you perspective. gain then you market I Do Okay. Sally

Marlo Cormier

again that the the to color think for Sally’s home consumer Sally Well, only really sells I use. outlet professional

hard market moment. is reality so out XX%, BSG there. it’s it’s a gauge share obviously growing the The And clearly to talk category. outgrowing in the in color we’re about I’ll significantly

you alternatives I’m or others some whether pretty consumers if color at the of a go it have So its box look wasn’t clear XX%.

So competitive confidence. that and Sally options we’re us have for the the gives customers outgrowing

don’t, largest geography, and cover as with clouded through significantly you reasons. is One is BSG numbers, they smaller comparisons that’s competitor next for are On They’re cover the and in our two significant our they we hard Canada. and Canada that reasons. for is absorbed two it’s know side, disruption, which so been don’t who Canada,

to is other which match don’t just The footprint, think of much about reality that’s The would small of footprints competitively color be franchise have business business national more double have more first, extensive at They number we result franchisees Louisiana. than one as footprint, though than the of health the of is we strength use why other and throughout the middle really and make metrics the a is And we the data, the the stores. look a country. look at we in the a growth. up Texas, really

which and for And quarter, XX% up category in that BSG. care if get is XX% next color a their care the is frequency was adjacency BSG up buy. is high then of So you the the you stylist, That’s color. recruit they

obviously are encouraging. numbers those So

thing look directly we The growth at competitive brands. is other on

look that brands matrix that sold are that quarter. matrix both both growth overlap Olaplex largest and are U.S., a And up are within couple where exclusive, big of at BSG the with obviously. was up that in two Olaplex, our although brands the we XXX% are we most largest sell brands. the brands our of XX% quarter the of and in both are are the These those if scale, So there the scale in businesses and compete competitor next was at you and of in they’re

the those and very customers at feel So metrics, for trending, and about good at the don’t competing is again, well market business. when we’re as good as we have external about sharing data, metrics business we trending we both look look how although very how that share those

Rupesh Parikh

along. Thank Okay. you. I’ll it pass Great.

Operator

go Steph with we’ll next, go to Please Wissink Jefferies. ahead. And

Steph Wissink

Thanks. Good morning everyone.

could, we new could seeing if housekeeping a little bit about in CRM to your terms talk what of you’re couple you a your file Just of and customers?

Chris Brickman

of And you a CRM. of first parts cover couple thank the question. all, I’ll for Stephanie, Yes, on

saw to a hit, surprising. registering the In file, have license, program terms based file not large pandemic a file but a a is Sally time. of we didn’t with pandemic program we coming loyalty as customer this loyalty of a just a saw have people obviously, upon the did that beginning of is at customer file the in or lot It new stopped CRM – based a had customers the out, at on program. decline And a

new not way. CRM the just of over last continue the to its that better We a it’s really journeys the have the all beginning add the we’ve or portion now the it was well back the to to program customer. program to come in It we’ve at team significant launched And custom pandemic, our technology the two. quarter starting file pick on and and back is we’ve where for about seen capability course, of way And ability last but added loyalty its is up BSG accelerating. fall. launched every is part the to CRM that The

for them, Sally, custom on follow content of journeys they well advice with purchase. now color that based color like. unique they follow products up in in we just their buy example, we up other first ideas give we upon customer do therefore, in there as how XX are take an terms And provide As might what as them the on we them

happened, get other still itself. of There some intimidated are pandemic come back, already much So just think who is out been customers there’s that’s are is happen, I who out older get, an customers it use of to back really going coming like whether or to be it’s has we getting that how the some left. reluctant we’re better still by much what but customer still but data there to the I

Operator

Please line of Baird. Mark ahead. the Altschwager from question with go next Our

Sarah Goldberg

side? you for be update is for Sarah cost the you economics? taking and services. offerings such was And leveraging digital scale the seeing to our as as thinking be then Mark. should could the such inflation we unit any pressures of you some also side, Thanks about the your on hoping everyone. on I continue might delivery or on labor on digital Hi question. cost us the Goldberg BOPIS This as How

Chris Brickman

I’ll take wage feel the cost first side. our on in XX% some are one have Yes, cost cost the in ability. margin as confident certainly we we and some on the the hold side, of product pressure, seeing cost and inflation seeing inflation to do ability very well. targets, believe our We

As those levers near start to the to pricing come the term. have our ability way, pull in

here SG&A As coming certainly side, as in near-term inflation seeing well over long-term. for we’re the the the wage

BSG we Probably, on We the happening the part at into back But our doing biggest good the via are now, Texas back we the as two some of distribution the back end of to profitability that. optimize well. investing are on we’re continue that to expect half markets half doing under and scale SG&A our ones be is that on as due opening year able back we continued measures our we’re offset around implementation do but of as and well initiatives increases, as ramping house, as work look marketing, well opening as front e-comm Part well. track at is with as the to have sequential then up, we’ll by we’re as at technology and larger be have completed IT up are and the tools. year, half of economies a we of should half when and to JDA side. that just the store least investment inflation, fact we for payroll least that’s and be is North performing and seeing also this the And in that stores side work finishing the our center way fleet month, back the improvement to optimization, in we’re our

Marlo Cormier

in e-comm channel margins. is effectively And store terms profitability, at of BOPIS

of So store margins. it’s effectively equivalent the

is and As just the of it slightly we be BSG subsidizing pass hour majority and and to below plans third just Sally I party to they store the Sally, they’re the two We passing delivery of at cost that three at XX% on outside think on margins. maybe at of delivery partner, will BSG that an launch delivery use or hour customer. all either

that and the day to overall. look is reality BOPIS delivery So same store should very similar margins

Sarah Goldberg

Great. Thank for that. you

Marlo Cormier

You bet.

Operator

next Simeon line of from Please ahead. Stanley. go And the with Morgan Gutman

Michael Kessler

Hey for Simeon. for Thank questions. guys. Kessler is This Michael our taking on you

little lastly guess, any that you’ve of, seeing this, similar guess, it I on continuing play be could if know, First, it sales seems your in March. different before saw we acceleration that you into playing with we in that basis wondering that on line into trends, underlying up on – trying in provide tracking the restocking came then, relative to based of as And guidance, kind post think is maybe of detail month? was been level, factors much point? on magnitude I April seem that March this miniature a of how a some saw I’m you is on seen? we’re to on saw expectations the – maybe would year? more came And you’re I we guess, you earlier what how your the shutdowns that above I we’re the would the, that – indication I And you, seem that curious, that like

Marlo Cormier

a there. There’s questions of in lot Yes.

Let me try few. a take and

wanted you If to....

Chris Brickman

you start deal the can I’ll color. on just and we the with Maybe in sales trends and saw what then

Marlo Cormier

Perfect.

Chris Brickman

very on delivered another stimulus choppy. a then pandemic of we like where that You very, and was round strong entire of round the to had know, mentioned have throughout expected, I than the where of we’ve we month-to-month, had got since a had February. very further we [indiscernible] Chris again a mean, to see Sally Sally as And had end XX% it almost and in off a March, we January, challenging in take seen the this we very QX. U.S. continued then And February month did end stimulus. started things earlier

BSG the side, market quarter. we latter And BSG heavy the throughout with and as then quarter. international part On of into restrictions the faced faced That closures got improved really challenges. the the the entire quarter headwinds

there’s to so and though, trends for super weeks, degree we restrictions, and I when government BSG. to month few said, see and we on a a January significantly in then had of takes was going impacted markets had end puts of we And California started throughout were acceleration number in And through more demand substantially closures January lesser off first and the challenging strong that month that the also was Salon a in US Sally. the took BSG. And in a quarter. Like round especially, the really and then I the January, stimulus. the in international of pickup. traffic by January slowed February for that’s for but the March. said like And

we COVID the was that’s tough. compare, I took the We taking and vaccine rollout some optimism we to And see U.S., so up. in the but hold had is and comparisons March, start in so of also optimism saw we’re stimulus, basis improved on ramping start first getting what where guess, shutdown Last a the in month global hold. also then year and terms vaccine

have you environment. dynamic obviously see where said overall really we remained compares. But traffic like choppy. very that’s And So a the year-over-year

but very making when as sure cautious into also some So balance we levers look pull we’re we’re there of to concern, there continue we make that sure actually that demand and as needed, the the year, the the giving being is us

Marlo Cormier

quarter, not Marlo to mentioned in do this give as going and your April be we’re but confidence but obviously continued the closure. we – slowly, in strengthening in surely, And consumer then some see the to in would results question, with out mixed we’re

Canada, especially closures Ontario there continental are our the and still place down and So stores, in a province in significant closed some Chile especially, And has that again. well. has America, number restrictions in Europe – shutdown has there of as Europe, Latin

quarter, it which continue some blend is gone and be it’s with consumer great, along ongoing expect turmoil going to pandemic this be we So, but agile. from now of obviously most a of demand we after to to the strengthening

Michael Kessler

there’s part squeeze a even still for to be might that Thank for and I’m get see closure those. more. a the given seeing just more could of And volatility. disruption to wanted from – level know just I on you’re little about baseline color we’re curious of apart kind kind taking curious, tests And you mobile you that Great. how question. of one what expectation if to just start. that in I store my just the assess you

guys. longer to as far is as you, Thank that don’t mean term you’re proceed kind know tests. I these thinking going you’re against know count store a don’t be that expectation there’s a and So, and about as measuring a kind of – there how on benchmark I if of I you

Chris Brickman

Yes, and for you the no much doubt, thank very question.

especially in out delivery I of the can think to for storefront reality you the footprints that is broad able been e-commerce part a we very us need our we’ve the of that balance homes do delivery store, And efficient salons consumers’ Sally. supply always know three open a footprint out our trying we’re is of to so way. to of what out hour of two makes BSG and to store

a and mentioned a well. will foot the think strategic retailers mentioned that think and large wage That advantage So balanced in next there footprint. years, significant being comes come is have for store store we said, with as other the in got a inflation that economics that as the few we’ve store on as I we need call,

– have or can stores look that the metrics. customer. follow at and accretion to to we we’ll at e-com, other either number sales many is one look metric the number there by quite we want closely of those do we metric although The So one are

have And we we XX I close so stores as store, mentioned.

options. We have close by stores of them marketing plan their obviously contact a detailed customers, to to in to where notify of are, notify them place e-com

days XX We’re closure. going we’ll days do that to XX out, out, days XX execute out, the then

do how any there. the can we lose the many. to you of they as We do cautious and customers well how us and need this we as we at. all be Do and that customers consolidation through And need point much that’ll what get do you customers and inform when really what really – lose track at how will profitably, we of as do how about where buy is

So we’ve of in got place. a tracking lot

next And quarters guide learn long to then term. in of to a the our couple overall from the use it. going we’ll lot then, portfolio on We’re that thinking

Michael Kessler

you. Thank Good of luck for the year. the rest

Chris Brickman

you. Thank

Operator

Our is from go next question Joe Altobello Raymond ahead. with James. Please

Adam Tindle

This a of helpful. quarter. for everyone. detail providing cadence That for on a results was morning second the throughout Joe. particularly good Hi, Thanks is in Adam

I detail stimulus just little a alluded that seen impact you then boost quantify January impact maybe stimulus off just in that more acknowledging would overstating in while another obviously I’m have tough of March, or to impact. be helpful. this it’s point the was the at a and the curious, one You wearing to

Marlo Cormier

Let a seeing consumer it tell most Marlo I sure. and in me at difference versus jump of stimulus increasing case where vaccinated a where can But you counts and from April, we was extra very there patterns. do color. point – just worn see actually competence in was is provide any in now it out past. you start now you see off. they markets we in get was markets interesting resurgent demand this and of the and we’re there a lot then is and as is then as drop could think, worn And not could May, and optimism for what think can’t I in think that

that’ll it driver reduced business primary the So continues if and and for of cases going the that in whole forward. see direction as greater be move we the that’s positive to competence, a we country think this

Adam Tindle

the helpful. a if very from I impact wanted ago? storms Texas briefly guys Great. That’s saw ask you months to couple And from any

Chris Brickman

it month that it significant where, in coming at Yes, cases that a hard I blended It’s mean event, into now a weather now. just peak know US. the to and was we’re was and were we forget where hospitalizations off peak you as

day. February, of think some I by were if they was, weren’t doubt. and the to challenge impacted no of it for I weather, closed ours one for were many They others were And of weren’t days. It closed multiple even closed So, they added just closed. think stores the roughly X,XXX

don’t a it but So it’s if I worse or impact. other February. better know than winters, significant in was most was it concentrated

Adam Tindle

can squeeze and was I I guys last curious I providing one Chris. know guidance. in you aren’t one. Thanks

to mean, may year, case – or it’s typically on So that fall curious a ears the Would here is be I but you’re expect just was not that again EPS statement. of QX to this biggest perspective, you year. make ready if I

Chris Brickman

of Yes. takes. try think is you expect mean best could we in give the be lot dynamic a versus to environment felt to of puts XX% continue QX. we you We I XX% I into did just last and taking a QX we lot into a that to and and puts There’s as of range QX year. know we

So, positives of Chris has the mentioned consumer lot optimism. the a with

I a U.S. think so, lot can and internationally, you give the we guess at closures I the getting probably We in point. best still better think have of again, this that’s,

Adam Tindle

Congrats and strong you. on quarter. helpful the very That’s No. thank

Chris Brickman

very Thank much. you

Operator

Parikh Rupesh with to go ahead. we’ll next And go Please Oppenheimer.

Rupesh Parikh

on me Thanks for again. taking

the guess to I So just I follow-up operating margins. on want

had guys XX% this operating nearly You quarter. margins

longer-term whether that’s or, terms I sustainable you comment whichever level, maybe guess, in any of on. can period a Just thoughts

Marlo Cormier

economies in the stabilized leverage I are I and much SG&A. think we is environment, believe line. as we can be and about back sales you living near-term, mentioned, target and that XX% has we on pretty When guidance marketing, get markets, model, back we’re believe that SG&A Longer-term, margins, our in. I into normal dynamic strategic that we And In confident while a just we to very then opening think on top will payroll we something a invest very same-store back in good continue we growth gave something Yes. growing In in I believe we into we the and again priorities. confident very some would as looking low-single-digit, very believe gross we’re it the environment maintain. investing insight we side, into opening

near-term. to we you deliver yes. strong what dynamic term balancing keep longer saw, And as to Near invest we So maintain and we cash. it in our and will term, long-term, continue could on liquidity. sights the to continue And continue remains the very well do to while

that in so, And the our near is focus term.

Rupesh Parikh

great, follow-up. one Okay, maybe then additional and just

that and, to right versus So the the for, you say the Would the at way guide point this environment point year. I environment conservatism out prior at sales QX commentary? volatile so that’s a think Is flattish the think QX given this given growth just about there.

Marlo Cormier

Yes.

I tips summer and be a mean, any we spread. that internationally? a we be about balanced. clear. the variant a how want know new has Will The other there the be is it’s our yet September, be given We waves? when sudden out. great after yet. it reality we great all how this dynamic worst and was of been. think Think over like quarter don’t virus just Will closures second this all play ski I will wave had there a Will to get were any over let’s having additional don’t October last out there looked

reluctance to tips I over to this at it on point our some middle time. see part just play get It’s So, down think the ski just you in our better

Rupesh Parikh

Okay.

Marlo Cormier

QX. strong, strong was QX very last And

Chris Brickman

yes. was, It

Marlo Cormier

Given the environment.

Rupesh Parikh

Okay, great. Thank you.

Operator

Jefferies. Wissink with to we’ll Steph next And go go Please ahead.

Steph Wissink

kind to the vivid in the response my with call. to comments for you Chris earlier wanted file follow-up, just color of I the connect, question on Thank prior rebuild new on to your of And the your CRM? customers

as kind stickier almost as I period for think move just through offering. to a you. toward of customers old you’re back now. types we Thank color of that range think is, the the I’m of and seeing kind that then we cadence. of customer, third sequencing new new a for things, of mentioned customers you if Or like if trying vivid, come back normal and seeing it’s, customer you business of new normalcy? And What find you’re if into to you your coming feels back discover you it’s curious move a a you’re for

Marlo Cormier

don’t skew the does the has before want was And you a So from, it Not thanks group. was Sally’s even And already VSG. pandemic hit across business. went question pandemic. know, vivid before five although multiple XX a you’re color to are in it been day years. XX% sick growing color suggest it is the larger the reality in high-teens Stephanie. category, colors younger right, – that to quite it’s the age much of it as surprisingly And for It I growing for now so

I as think obviously, of And they’re the we and self trend general now trend freedom expression coming accelerated went toward there’s out. that expression. a into was self And pandemic.

work will the, that is to reality models continue the think I be hybrid.

are accepting and desire of different differences in think general ways. to more people’s I companies express their in themselves to be wants

more think self colored in going to or be or of any society openness piercing hair expression. tattoos other or form to vivid there’s I So

I goes So don’t think necessarily away. this naturally

is. side other The

might option We have options in have over an X,XXX assortment. vivid of carry you seller of go colors incredible lead States, in of assortment. out to XX almost the And if our the color to a terms XXX XX. our in next, they color stores, United largest We

the appealing of breadth incredible So as we is have this that really well. customer assortment to

of toward we’re And to and to on know, up some going trend And around I if a sustain will that customer don’t so going think you’re I I see yes, think expression I coming don’t by to, do June is I and in general enabling new fold. expression. to the XX% do think, marketing you itself. of Sally pick bringing think themselves. and I in feeding self there customers it’s that us growth our the it’ll some express

will think I down, slow category. think a be growing still that it’ll But I

Steph Wissink

are That’s great. that level, on to curve. of some wages, done your where you the wanted follow are minimum can up arc to I Thank the us I clear one on Marlo, know just can of peers hikes you have you just where $XX And proactive wages. remind wage up you, have on

Marlo Cormier

informed. are enthusiasts amount of and detail. they the house. that about and released What well will experts consultation, is, haven’t say Beauty side know we the of color our you care think they’re Yes, on associates, I

So, they as say higher other that, food worker, what to you think tend fast general retailers. paid. I would to When about a relative or be

Chris Brickman

Yes.

BSG side. that I on the that so So is reality the an think more even

Marlo Cormier

Right.

Chris Brickman

still we’re prepared believe So, it. but And coming. there we is wage for inflation

Steph Wissink

everybody. you Thank

Marlo Cormier

you. Thank

Operator

next from Casella Please go ahead. Our question with Carla JPMorgan.

Carla Casella

Hi.

on One, follow I missed for he year, your store here. on forward up. thoughts Just I gave think the two one then that going it, remainder guidance of the and openings and questions

Chris Brickman

Yes.

increase have a that stores mentioned XX also XX how actually a we other few opening, to do we’re we be and going to we XX, those BSG as test stores. Sally can closing sales Although understand, to

So I probably But slightly. don’t actually down, have the down net openings. thinking I’m it’s

Marlo Cormier

Handful.

Chris Brickman

Yes.

Carla Casella

net down are the openings So slightly.

talk seeing in you Great. post e-commerce, you’re now right it where but any in, Okay. curious about I’m if settles kind did more pandemic? BSG, also and how on where And then percentage and Sally normalcy, much sales, is you of at it that could settle of think

Chris Brickman

It’s in me single-digits the across the high think right entire across now enterprise excuse it’s I yes, seven X, our –

Marlo Cormier

X.X.

Chris Brickman

a are enterprise. will know Sally’s UK, to of don’t fulfilled to business think or we I be, little store. we that. strong, I hour entire but big through a and the years stores in, that think XX% reasonable. completely how it’s markets of bogus being is be grow. to two BSG three But that think above there’s like think below the And to of exactly two it’ll a quite is that across lot the XX% either And again, going from from our reality that X.X is Yes, it three delivery

Carla Casella

so much. you Thank great. That’s Okay.

Operator

Reuter with And next Bank we’ll of go America. ahead. to go a Please William

William Reuter

you went but making payments you quarter? been to during it those and Good saw were morning. the will that year when substantial this sales track don’t all have you impact guess stimulus – future terms make whether the mentioned able of know in out sales, in that spikes second payments your I you I expect

Chris Brickman

and we Yes. in as business Sally No, in Marlo mentioned saw comments, our we especially in them definitely January in did March. her early late

of four so purchases kind we drive our during stores of them the quarter. did see weeks in And those

Marlo Cormier

but optimism we I of March a read, March. so some the consumer had the acceleration bit did see enthusiasm it’s in March hard and too, in a there think

William Reuter

times. leverage X.X is That’s target at net of And the then your target net think leverage X.X currently you’re Okay. helpful. a times, leverage which I

you should returning terms about And at this to how guess your I shareholders think share all So are repurchase? capital Will me. there? point. about What cash that’s we in thoughts Thanks. of for allocation think

Marlo Cormier

as year we’ve first through another year. generation half the generation out, Yes. really question. million for of this again, the you Thank $XXX half the And, expect, cash pointed back we you cash and the in strong had of of

been working to reduce So we that expect have liquidity positions growth, our do the in as pay throughout really balancing way has strategic debt focus And is this forward, down strong continue that. we’ll well pandemic investing maintaining in entire on to to we our leverage. been which as prioritize going to

And make to subsequent did environment progress. with quarter continuing then down as are with out paid macro this the the the things we stabilized more We gets come of the when to notes. again, in we predictable So X.X% great pandemic. April

We shareholders. will evaluate optimal tax to return value to

William Reuter

Great.

great. Sounds

Operator

on to presenters the the no further to have And we call, it questions. turn I’ll back you.

Chris Brickman

thank us to Just for everybody like joining today.

you those continue with to today which the the the speed both customers soon. of again forward. be as to as talking we’re our on for health value will we for executing excited our and going create Thanks business your time core forward We initiatives, and look to about well strategic

Operator

Ladies gentlemen your does today. and conference that for Thank for you conclude your participation.

disconnect. You now may

Sally Beauty (SBH) 8 May 212021 Q2 Earnings call transcript