SBH - Earnings call 1 2024 | Sally Beauty Holdings, Inc.

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Operator

Good morning, everyone, and welcome to Sally Beauty Holdings' conference call to discuss the company's first quarter fiscal 2024 results. [Operator Instructions] Now I would like to turn the call over to Jeff Harkins, Vice President of Investor Relations and Treasurer for Sally Beauty Holdings.

Jeff Harkins

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

Litigation would call remind within may of Private I remarks that the begin, XXXX. the this of on contain Securities we like everyone to management's meaning Before Act Reform forward-looking statements Actual with results indicated forward-looking in factors, as on statements recent the important XX-K from the Risk result other various of those Form by annual our of most these a including differ may materially SEC. those discussed filings Factors and section report

our represent update call only this has website. on and made statements measures its undertake reconciliations to forward-looking today, non-GAAP of obligations provided and in its we items earnings them. views and its explanation Any as company adjusting press of financial on a release no detailed The and

the to the over like Now Denise turn I'd remarks. formal to begin to call

Denise Paulonis

Thank with morning, you, with was to fiscal We're performance forecast. marked our our in start pleased that Jeff, by financial good XXXX, line everyone. and

net store X.X%, First comparable X.X% quarter million the in XXXX, the that sales in closures lapping while declined quarter. declined December reflecting primarily occurred sales of $XXX of

was margin expectations, came line with at gross adjusted operating Adjusted XX% margin and and in X.X%. above in our

to of through generated cash we operating enabling to than $XX value flow solid million, $XX us million Additionally, of repurchases. return shareholders more share

buying of while fairly need. shopping segment, behavior Goldwell of recent coupled strong acquisition remained momentum with BSG they up quarters to with X%. New ticket X% product customer strengthening trends, primarily demand and as York. segment, transactions selling In Comparable sales our increased our X%, continued our declined QX average In consistent value as were modest from comparable salon we saw in a launches recent

X% ticket down comparable transactions up and comparable sales X%. X% with QX average were value down

efficiency product territory our customer continue to XXX the new high-margin top growing line year. expansion expect innovation that services our will continue that centricity, brands our points initiatives to our teams enhancing contribute innovation, and performance and strategic to our this increasing end, execute we of operations. to XXX amplifying owned Our of To core against well and basis

with contributed points During line innovation results predominant in the driver. sales to the being with first expectations, XXX quarter, over product these our basis our comparable initiatives

few share highlights. a me Let

Starting with innovation. product

momentum QX, both brand the over sales are our own Sally up brands. points year. Global and basis We for segment third-party the across was seeing owned In penetration Beauty XX prior XX%,

Canada, grown and largest remains Ion to well and Ion owned bondbar our to with strength time note, in color. market. Ion just Additionally, notable owned our lines our continue in fifth in the be has in bondbar and Of bondbar a U.S. and largest brand perform the year's care over brand

launches of strong product in both we'll our category, proprietary next year. have also lines where planned and several performance XXXX for tools a appliances, across color, this have throughout innovation brands. We're care, styling texture we month, seeing care the Beginning pipeline and later happening national encompassing

at Turning Oil include to Color Moroccan Standout innovation BSG. Wow. Amika, Repair, Wella's Ultimate performers and

our brand Oil we Color across additional distribution During portfolio. territory quarter, expanded both our the and expansion we Wow for and have Moroccan opportunity first

York captured quarter we of Goldwell full Additionally, sales first New acquisition. the our from of

to The robust we BSG year, this their profitably to meaningful our planned partner a segment will be which stylists also pipeline businesses. of with has innovation particularly for as them grow

and express and conscious coloring beauty brands, as textured expect hair. existing well You new as across glossing can see blonding, in both launches to and

customer us continues ongoing to focus well. centricity on Our serve

while and credit purchases generated In XX rewards XX% represented our loyalty of Sally card and QX, BSG million members, our X% Canada from we sales. sales of U.S.

our for fiscal plans building 'XX. Our are new we concepts year and services and momentum, to are full tracking

Sally. in extend initiative gain of traction. That's new customers to In just QX, who up Demand Our is engaged to from Colorist of helping our XX% reach in XX% QX. service continues On our us Licensed and north were the

colorists this against as gaining At that we the and last plan XX initiative, the which launched the grows. building to approximately Instacart, had have to We're our platform year in which success of we marketplace expand also licensed demand fiscal traction with on leverage us and with to on for quarters, to Amazon. quarter coming year, will had XXX end, fulfillment. the DoorDash enable we in-store QX Walmart add plan In service

Turning very fiscal XX which the season. in At QX year-end, performance, had pilot Happy we were operation, and Beauty included holiday pleased now Co. selling stores to with we

consistent average that the be see in expected value stores gift-giving and shape traffic, November to with increases conversion attractive December. throughout We take transaction we're gratified to an and destination, and

to continuing remain over to of portfolio business build Beauty potential a that reignite at enthusiastic our build about marketing and are behaving the with at we across and Sally strategies. historical confident the term. Happy and long customers grassroots segments, the same When at look awareness sizable BSG We the potential both we're right to how the growth sales. on our the they're course We're initiatives of consider our newer and time,

the anticipated our Building our earlier, sales our comparable line half sales to to to see advance expect to the the from that comparable strategic pressure offset XXX were further for flat. factors improvement expectations, our QX and as mentioned XXX with which of strategic continue full sales second expectation on which year This net we maintaining results, initiatives. macro reflects year, calls initiatives, we fiscal In consumer I we're basis points sequential in spending. growth our XXXX be guidance, which will by of approximately in

We are also continuing profitability. to prioritize

capture $XX remain in of XXXX. on underway, benefits fiscal is million Our previously Fuel for Growth track to we initiative pretax announced and

and opportunities XXXX XXXX. external years the that a outsourcing algorithm this operate have supply growth and spend, that way operating is we our supports that margins, effect comprehensive margin. long-term to resource in automation highlight is merchandising partnered chains, to begun efficiency, and that a double-digit want incremental with end, fundamentally non-trade take program inventory an low recently I uncover around fiscal for and we changing To will

this run fiscal in tranche outgrowth totaling we've XXXX XXXX $XX identified approach another expected pretax benefits to of approximately benefits As with initial million rate potential assessment, $XXX fiscal million. in of an cumulative

more initiatives We'll on we to forward strong pleased customers, customer competitive and analysis share centricity, started throughout our look further We're our of We continue important the believe wallet XXXX our execution these across innovation as our and have months. and to advancing are coming efficiency new areas to to with our map fiscal share road strengthening the position. have in focus attract year. pillars increasing

the patterns highly stylists effectively BSG customers retail macro our are deep of among engaged, is teams dynamic shopping environment. our and us and to purchasing navigate behavior Our understanding enabling

the line initiatives our algorithms confidence We low of increasing our and all value our margin. the and positioning double-digit operating market we're which your stakeholders. traction remain support mid-single-digit for top committed in to we've strong communicated, in seeing greatly appreciate to low growth for Our previously and calls underpin growth long-term continued

I'll to Now to over turn call discuss the financials. the Marlo

Marlo Cormier

Thank financial with you, expectations the our in year progress our and We're line begin with against Denise, and good pleased morning, strategic continued results everyone. to initiatives.

million XX% points and from X.X%. represented primarily exchange of sales December Consolidated First closures currency quarter sales total X.X%, consolidated store net impact declined XXXX million reflecting our of basis comparable impact. sales. $XX sales favorable and foreign of the unfavorable Global e-commerce were net XX $XXX declined

fixed lower gross in the year absorption a came than basis and drove XX related at cost at BSG points ago. well as shift between of as XX.X%, unfavorable gross inventory versus chain down Beauty We sales freight which Sally offset were Looking the profit. which timing efficiencies costs maintained Supply more by quarter, adjusted receipts. distribution margin, strong to and in mix

million $X our optimization rent $XXX distribution related savings SG&A costs partially adjusted center million, and expense well costs last quarter up increased offset was to primarily labor consolidation as from reflecting to initiatives, strategic First year. our by store actions as other and

reflects versus for offset expect For This marketing to partially the related initiatives, investments increased strategic be by impact to XXXX. other modestly as Fuel funnel up well the full labor favorable in of initiative. year, as our upper dollars we our fiscal expenses growth Growth and costs primarily SG&A

and benefits $XX second during XXXX. to reminder, gross of margin fiscal we As realize of expect a the to pretax SG&A million half

For of XX% realized benefits perspective, SG&A. will be approximately in the

initiatives expanding fiscal to XXXX goods for million. expect mentioned, we year our now Denise As of Growth incremental SG&A and in $XX of approximately are savings the cost of Fuel capture scope and

fiscal are process of the which cumulative in in should for additional million us $XXX We XXXX, see uncovering approach map opportunities building the road and benefits.

fiscal with $XX in We range Fuel expect to for $X QX. the $XX including pretax million million the year, Growth charges incur realized that in the associated current million in program to was of

came per Turning was share Adjusted diluted margins to at and $X.XX. was earnings. in operating EBITDA earnings adjusted margin now XX.X%, X.X%. Adjusted

constant closures store net while X% bind were Beauty remained need. our primarily segment X% sales down Sally to represented Moving and the sales of customer XXXX lapped X%, results. Sally as for e-commerce currency, comparable our to segment and At sales quarter. sales frugal, net we were Sally $XX million declined

For was store care including At color Sally down down impact X%, X%, Canada, X% and and U.S. care closures. Beauty flat. the Sally was was was Global color segment, down the of and

pressure absorption, spending XX Sally XX.X%. sales margin over U.S. as Sally color market as remained year, driven market unfavorable category share which sales lower our higher data down last and the fixed points believe in We an cost Segment for came shows supply lower care margin by well at international costs. partially offset would on primarily data was the and operating reflects margin freight by year. stable Gross between consumer margin distribution unfavorable mix prior efficiencies, chain macro-driven to and drove basis that shift sales highlight Sally and XX.X%, at

e-commerce while an the new expanded BSG Moving net sales X% X%, color segment. well the the was to while of up X%, distribution as demand were as constant for Comparable On on a sales on in fewer XX sales BSG innovation. improvement $XX total brand sales quarter. basis. were up from million, a and trends BSG We salon The at segment flat care declined representing currency benefits stores. sales approximately basis, net were saw XX% category

at shrink primarily operating was chain was Segment by declined partially product as by expense, as came costs year-over-year distribution XX absorption The margins. points basis from unfavorable margin Adjusted well XX.X%. BSG gross higher XX.X%. at lower freight and efficiencies offset and and margin cost supply decline fixed in driven

and under cash the and outstanding at and quarter flow. cash Looking asset-based equivalents no of first credit. of balance million cash We revolving our with sheet line the $XXX ended balance

Our at X.Xx. debt stood leverage net ratio

overall in of which and to repurchase share our line in will Quarter-end healthy hold repurchase is that fund. generated in-stock positive reflects a operations of expectations range throughout billion levels allowing from relatively with levels. inventory $X was million, our north stock just inventory billion, $XX the position, anticipate including solid $X $XX year. under flow of cash steady the us We million We

fiscal investments from XXXX, consumer services in segment, net our distribution to to our our full to start and by well expectation follows: sales flat, comparable as our headwinds. as and will outlook and we we continue with new expanded growth expect basis of to points as approximately are offset initiatives reflecting in pleased XXX macro We're affected that the maintaining year by sales be strategic XXX BSG spending be

We flow margin cash Operating expect to be to is Adjusted gross least X%. at expected operating XX%. be million. margin to remain $XXX expenditures million, are be to is and above planned capital expected $XXX at approximately least

in the of following care in hair assumptions: year, compares comparable the will several the segments. easier based BSG, last expected to is quarters second both lapping the from sales to half of lead is half outlook second our year. At drivers headwinds of in improve business on positive the of performance reflecting Our the the

continued the from distribution benefit second is expected in also expanded opportunities. momentum to brand half and innovation new Additionally,

incremental Colorist and on Demand DoorDash, well At pricing Walmart ramp of expect the Europe brand benefits Licensed by as expansion as improvement line the of Sally, driven the from Instacart in be we Marketplace and addition new the to top of launches. and On

Growth half of Lastly, XX boost Fuel under of are the in basis initiative second the essentially $XX year margins year million and realized approximately operating expected our the benefits for by full be points. to

quarter. second the Looking at

flat net traffic in from impact $XX expect persistent approximately to weather of to X%. most of down million comps and across bad sales January coinciding This We country. be includes the with early softness

saw we a January, and of returned trends cadence. to week fourth the moderate during pressure this normalized Importantly,

a dollar usually quarter our total As lowest sales the QX reminder, from perspective. is

the driven see QX, to in by cost margin of in impact inventory sequential fixed expect to We part diminishing unfavorable related in large improvement from rate timing gross absorption projected purchases.

adjusted anticipate approximately operating will be margin Additionally, we X%. that

your Lastly, it time last similar this repurchases to is appreciate investments quarter share reasonable second in morning. expect that in to We the quarter. our is

call the open ask Q&A. operator the I'll Now for to

Operator

[Operator from Wolfmeyer the Instructions] line Our first question is of Sandler. from Korinne Piper

Korinne Wolfmeyer

much driven kind volume quarter down the we that versus brands comp to versus performance this how brands? driven how should was as national by much was your like well? much then of then owned of price And how well, by And be in -- as break you I'd versus going First, mix? understand can about better forward, thinking how

Denise Paulonis

start there. me Let

So total, Within of that performance from innovation comp XXX that, driver. overall. had goodness was in the basis initiatives delivered strategic points we the about our largest

looked were was your to was contribute The both And brands course, own both be base. growth our healthy a of question, side, portion company we from the to the brands pronounced on to brands there within and BSG business would owned of pronounced in brands. in growth our contribution growth growth that as but national national where, Sally, the

you came side when Sally really and different on the saw look mix X we at the that side. of the together, how all BSG then stories And

On the in to counts, up. coming the saw BSG as We through demand. a we transactions particularly quarter end saw the side, were of customer modest as uptick nice stylists came

was continue. the news we'll great the coming traffic and watching we we but store, that see that trend the will while was it persist customers closely, demand of really we're slightly into that and through transactions that So that and hope down, incremental ticket saw

overall Sally categories. continue pleased the reflect bit. that down, the were ticket On consumer That see were continues to of buying their house, into we closer spending bit core need, see color. strength transactions we was a in to while a to But up side to

that to see and in, believe we're continue share behavior. textures space bit We that a facing holding in of consumer in we're strength on the really pressure purchasing

Korinne Wolfmeyer

may the on walk prepared of versus understand margin then of you just the other benefit then a bit And more, little higher give was were how margin? want the the to by bit much puts how getting pressures I and kind much gross contraction of be absorption better can any shrink from versus you to in the And remarks, helpful. driven fixed cost product little seeing? line, color Very you but a takes through

Marlo Cormier

you. Thank Yes.

strong see on and were still above takes. basis the puts XX% the margin mark gross gross delivering really did and pressure there. QX. XX There a we're pleased So points about margins of in line, of We handful

out efficiencies, see to costs. to the driving positive freight supply lower as focus there. distribution side, continue got We've on So and on continue we chain we goodness coming

quarter year. the As BSG lower ebbs offsets, were to incur yes, a a did throughout due there We some and the absorption. We did greater sales. have greater of timing. a few. percentage really of unfavorable margin sales cost That's or BSG in percentage, That flows the fixed

we see as We that and expect get to into diminish come QX. back

business. that minor would then say BSG a have And shrink. our did lastly, I most was we the headwind, that's part. minor and some really It in was

Operator

Helgans question from next move Our Cowen. from is Ashley Chen Jefferies. to We'll Oliver from TD

Ashley Helgans

then trends. traffic trended has hair about there's years. talk could trend if care last Bonding you curious emerging emerging throughout over we on a so how any level. the you're also the seeing of popular If else couple if anything new in curious were that's Just been quarter. And

Denise Paulonis

But supported -- stronger Traffic the December by went really little quarter. we quarter softer we relatively any October bit the overall. side to December a bit changes was business. and little BSG bit we Yes. we softer throughout the see month-over-month saw a had pick through with big stable of a If little anything, as the didn't

seen. consistent trends, the trends And then what very we've of purpose in with remain

trend. hair the in bonding bit scalp a are On with hair interest it things overall. and care efficacy about of that look along of front, that improving the and right feel more terms of your of health little see hair We the your that about is and goes in care really type

And on think about important. you are it, the continue see that the color to when front, glossing things ticking, we

bit turn chairs more You their continue lets stylists that important to see a often. because express

trend, there. the across healthy So board shifts no in but major business continued good

Operator

The Simeon Stanley. Morgan from question is from next Gutman

Simeon Gutman

where you the -- customers while trade sequential a case like a it first the doing be under consumer business, consumer was service the you that? coming little to or on from consumer are benefited that -- different pressure. There seeing opting Because see people basis, it the My Sally question side, a do seem at on doesn't talk down themselves? a are ago but and on was spending, cohorts while you softer. about get this time to from a being Can not in least

Denise Paulonis

Yes. consumer think to business ebb Sally is stable and we we'd the resistant the flow very can business, that's we I say business a trends and a overall, some pretty have Simeon, offset extent. we that because have just and what to demand some BSG of

lower we SBI in we no environment. trade in mark, So inflation pretty time, all we seeing those pressure. within When on see the of the of over world, outside for buildup a income, below come side that, think down particularly macro The increased see a feeling the where performance when customers down our is particular frugality, through. are we're companies what the seeing that's X%, good the we we're look challenged or surprise, $XX,XXX that folks

also stress. later frugal and very are they are card mix in. buy pay still But to need. still a we're coming exhibiting credit for seeing just buying them They now And that higher they are about what shopping. They with are to buying,

that need time." to that. up in want point buying probably splurges be would be means do my hair that tool, roots, going color I'm doing "I at to things to styling not that touch and is buy buying brush, I do What this I And because the keep more extra

we with many of begin of around. as stores, coming what's down as brands and trade with priced But well our that have to mix national that in. our value our pretty point we with So own and brands bit the a we're reasonably see little of in

behavior credit what I'd card anything, and just see consistent way purchasing a bit towards little buy with and mix with people are later. in pretty say if the more now So stress we've seen pay that

Simeon Gutman

press Okay. first factor A demand was the improvement. follow-up on At a it release, for salon trends. end, as BSG. it expanded distribution improving listed The

to And BSG So a you more into January? about base those comp what in was it that stays weather and can just that the then two? related proportionally the enter impact, Goldwell, of did while? impact talk Sally bought, or Or that you out does Sally? for it, it

Denise Paulonis

when the drove about overall, factors So key overall. we what think X business, BSG were there

and So Ultimate distribution in Wella's we With improving brands places few lean salon that and where Oil And very mix. say, in innovation, in trends, into those order. Repair, helped. in Moroccan particular, when distribution Color extended have innovation saw expanded Wow demand I'd our Wow, certainly Moroccan Color that Amika, customers Oil, broadly, that with of are we a

Goldwell acquisition it part The the comp that goes and of portion does business, of into of not. part

the acquisition go does stores do cost, into but rest go the So service with the business the into not full comp. and new of came that

with a bit and But for there. year, line million split the that build be So $XX million perform it's in that a we're expectations. we to seeing had $XX expected to entire

has that pleased So to how we're bear. really with come

the and see second of to little stores saying, you then feeling intercepts "I'm question trends, and up could that the of we're And part part was? customers me into as just remind mix. that for salon and saw your in And great improving come with your demand coming the was shop. pick that The what really a busier." seeing And if us in as just then we traffic finally,

Simeon Gutman

affect weather, about you that and the It some softness. was BSG? Sally talked where Does

Denise Paulonis

Yes.

was weather, will launch early great that the It February has that tied was end part around softness to saw businesses. today, of turned that, into the So we news in we across really is both And at Sally, predominantly the January. of we the but January as it believe continue.

both take, split businesses. give but I did to or it that if affect XX% BSG have XX% Sally, at it it it, looked was if So XX% we BSG, way,

Operator

question next Tong from the Olivia is from James. And Raymond

Olivia Tong Cheang

better trends how demand unchanged. the You mentioned a year what's on you was at that? improving But Could year just you just expected, full leave expand talk BSG You driving could that about start? bit did BSG. outlook expectations influences than given comp full to your salon that

Denise Paulonis

talked they they is And being as way about seeing it about demand the modest into really with their we behavior as trends, understand stores, come improvement online they trends. What us talk about our talked and that how demand that and in our of we improving purchase transact the just businesses. we watching stylists

the it in of their they into coming people the phrased they period was their chair than a year. the kind ahead wanting the refresh earlier more extent saw holiday a had come way more look, season, The holiday, bit normalcy of to been to in they of in bit filling

little stylists we're really we've that our So encouraged a their a and salon business. bit of that seen new uptick line. trend for But it's

we're the an going watch that, expectation see come We'll year. have for we projections So we it as that react our look to to really to and the through. certainly as continue or further of that's baking remainder not continuation growth

we first Overall, would in thing in come performed the with guidance, back is to quarter. our expectations really holding line the in our I

unusually point. in our we traffic to to saw pressured minds, those rather early It January in in the recoup a overall quarter, on not weeks, that that see enough early at week of of we're as trend the the of back the softness lasted really quarter, rest last that bit did we And for couple the that happened through January persistent going going the but of the retail start forward. and we're to get As second long very we was weather look certainly off. things betting

for rest healthy. lost that that, little that, really of a quite air that the sales of underneath we pocket the came bit So and guide that reflects fact that, think a but QX the our of was from business

from But to that an will to sales gross down in discussed margin QX, January X% pressure. believe X to So reflects early QX we Marlo the improve earlier had for continue quarter of question. comp as that bit on

And the prepared ramp year. of then we're well really the into half back to

BSG We distribution. for also the continuing innovation set expanded think this year. last that and outlined that from brand to be one hair new finally the of about also will lap on the We're strength care call, headwinds but brand momentum we with from up

Sally, the And through, Europe to think the as year in continue marketplaces of embark some in as the are brand half growth back year. see And we been then working of launches Licensed Demand. our and to the where with well, Colorist elevate new we coming second we going we've in then improvements that on hard on the half pricing that

the So the we'll all to what expected expect our and year, with in all, see for first generally a way top we but of the to, we second of unfolding than year the bit on the stronger be do line the is the half that pleased it half year start.

Olivia Tong Cheang

That's very helpful.

get weather QX December line, the expectations I then going So don't and you your touch a second impacted change better. more into to less or just that if in sounds or to could QX, no in expectation relative more less by summarize maybe obviously quarter? like back that expect it half,

Denise Paulonis

Fair enough.

Olivia Tong Cheang

Got it.

my just question for the then program. Fuel is And Okay. next Growth around

just just that you Any or with little rate bit savings. new incremental existing from? about Can continue buckets? better a where just you're talk program, talked savings is about little achieving as that success savings in bit You you coming seeing the a buckets

Marlo Cormier

Yes. you. Thank Yes.

flow we quarter, identified benefits is work. cost early for of goods. SG&A, had really our Most last through our we loaded. XX% talked stages of $XX million out called We XXXX. about we that growth of we And being back-half in that of XX% that fuel weighted were expect as So to

with about external talk adviser. an did partnership We our

into path now million We rate the flow approaching that as see on testing we to XXXX see chain, we we and another can XX% early the shipping through get get a through that to we cumulative of it's have run identifying are program, $XX in supply where from frequency, and assessment, believe $XXX we're our we biweekly like that stages, fleet. completed XXXX. we million fiscal were in And programs our the that coming then

For Sally, that shy of BSG. on we're

to year. We negotiations both relationships. merchandising We're and opportunities resale path But We've this Our within as goods to banners. outsourcing. see look our non-trade get on and goal we that greater our opportunities automation, XX% is got across forward, we seeing payables. for vendor we're around not within see for for

a variety programs. of see we So

to But merchandising forward we that within benefits and start will the as margin. so we in where chain falls, see more and supply gross more look areas get

to great you'll to balance into the that about think I out we're pretty XX-XX years. see as So and we program, we're future bit get start excited But a off a start.

Operator

question next The is Chen from Oliver from Cowen. TD

Oliver Chen

Just about then were as to how model how views you look we interplaying trends inventory I about thinking Also, of how sales. in inventory, in curious finally, love promotional there. with you're pricing? the planning And would We terms underlying environment seeing as and traffic? you're you're that curious about the landscape that's we forward, on relative do expect volatility

Denise Paulonis

stylists. last and Sally how consistent quarter. start I'll remains for It with landscape. remains with So important both BSG our our point we pretty it promotional the customers on described Value

activity BSG compared as demand higher what point, lot to bit activity with consistent year. of promotional actually promotional last do see of unit that happens. last little quarter a play, bit in saw pull-through stylists the see is that And a On a when that we we we

bit into So I see a respond we promotion. stylists to outsized do had in nothing the but said, particularly that our have built there we terms trend, of better like model,

At would are bit dollars. I of a Sally customers the their day, Eddie. with end side, it just steady the On call overall the being frugal

ensuring are see in overall. thing promotion, we changes store. the right meaningful will a coming So moderating us And in don't turn, into with traffic value for we're we or drive that without doing that that the and

the the you of importantly, of remain conservative out light business, can think we'll that's on sides that on pricing. I both expect in landscape there

significant would increases price The But importantly, now for costs expect term have that in our in good right is to macro things drive the fewer would and environment. be moderated. commodity other AUR the of look light we're near increases seeing any flowing not we and news come through through vendors as

than So not business quarter, we certainly saw but different consumer both value-oriented what much on today. sides last of very our a

of we terms definitely call volatility volatility we moderate I'd it in down. see -- traffic, and and In the up saw quarter, volatility but

strength. been now seeing started which more We'll need, And event, less we've to people come buy into their you're to that see expect swings. for up, that really it's that, for that, just think with come but bit aligned we're when as tick something I through. little quarters a habits bit little in to periods, impact really not now to going then need. to since traffic customers X tailoring inflation a probably for wild see purchase need where the an like It's down seeing

and was -- on one your to final that inventory, kick So Marlo. over I'll then question

Marlo Cormier

to Yes, range. it you. run really inventory, Thank we expect the in $X billion

cadence, the of $X and look loaded, at range. you of into we billion the as the As progress level into fairly down little a kind quarterly build bit drop year back then

on on in method. cost One to inventory, we keep a average weighted mind are thing

maintain through lag we've got of are seen previously. unit Those their inventory. price those of making improved way So we a had to increases vendor But process. a continue the to bit that still levels we

Our units down. are

the vendor where level to or the see due all system. that's increases, making you through their So increases, the way cost

really We supply and targets in-stock are are levels levels. of unit healthy hitting our at weeks our

Oliver Chen

follow-up. One

are own the One change? there highlights of opportunities of and of portfolio. is for What you company advantages your brand innovation your see competitive

Denise Paulonis

very brand bondbar we own-brand Yes. color. Of front bringing have with we there excited made customer into We're very of customers and good there from and biggest the extension that them. a response in portfolio. late, the when out the We're that about launch bondbar was in the modern new on. get seeing Spot of care change of

Innovation come being track to more forward a natural from very is around -- desire maybe follow for going trends similar desire consumer of free products aligned younger with products.

about where mindful the more all as think can you on good about be can how side. we it that care the coming And play shop you So particularly talk there, we as be through. can environment things for spaces we'll

as places and sunscreen things into for you'll looking expand like people push orientation You'll for also see once where that are hair on us us again see continue more well. Ion solutions your to

the dial-up as brand. really continued business I'd bondbar our expansion tied items our natural So of coming mindful and focus well to problem on kind then as of Ion on through solving

Operator

from is question last Bolton-Weiser queue Linda the D.A. from And Davidson. in

Linda Bolton-Weiser

in studies just in quantify you've other costs -- talking your in the experimentation pilot you concepts. FY do tests was curious but if if then you And been concept? expand pilot to did this more those plans could give more fiscal I color the year. think store will I about it, open about about And stores? you you those Like 'XX, your of I wondering any sorry with missed to was value related these

Denise Paulonis

we're the X on think I is One appreciate I initiative the When by Beauty focus Co. and that now, Happy areas. question. key initiatives the concept the our Studio value really about Yes. concept then I'd right piloting with other Sally is

one maybe step. So I'll start Co. back bit a Beauty with Happy up I'll or

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build no line to XX and impact stores I Beauty either and material awareness we're in Happy at have months Co., traffic. been we traction up running. this But initiative since opportunity from to We've set, first look X bottom year. gaining launch, the continuing and our if So the the

we're ticket stores, and saw, gifting, season. our really pleased well. and coming UPT what the holiday well we social We that's for positioned doing X. seeing very very thought we media grassroots that what We quite teams through the executed brand We're was XX and over with saw through. with And around that were $XX

December that supporting and gifting. idea the saw stronger holiday than that, weeks, it's performance shopping we that

believe over year they consider through where about that real long over of excited be perform into we're path going meaningfully the pushing of potential on expansion an would perform, opportunity metrics year. and this to for see we carrying rather remain openings. more to More term, but additional as we next some could about XXX those learnings as the than could come if we be the that stores So continue future a the calls we there, start

and studio us. the deliver side, on we what then open. there they stores And to X have understanding reading We're performance really

have people with salon. environment the As you'll these participate remember, stores salon opportunity for DIY to the in the

the having the very feel the stores and addition, in to is we difference overall. reaction to and we But about those changes stores delivering customer much experience the made store in how better think seeing look both how what into positive stronger gone We're a feel, lines, about graphics, they in terms to signage and education of lower sight brand, stores. navigation, throughout gondolas,

we Sally we So there about and think how the learning a just can think relocations remodels we're fleet. that inform lot overall, that within

giving is studio learnings their to how the points what how a we great them, people as our to products, well. us on and use we're are, continuing those opportunity understand build help can And pain

a have if those year, see. through go the like potential to dozen balance We being see we'd as of few out get potential of to it the we the the there we what of more

So in they as come and seeing are They so be would great really that to look they look to through. term. meaningful be all hope both XXXX, able will the contributors contributors to pilots, are them but we we longer not cases,

Operator

are there you, Thank further questions. and no

Denise Paulonis

in all And today, appreciate in coming you dialing to more to quarters. Thank our to hearing keeping you us the day of customers. our do morning serve thank this you and around what We associates joining our posted you you to our forward and for all all story, the we thank world. and look investors, for of every

Operator

using conclude that for And teleconference. AT&T you today. ladies conference our for does gentlemen, Thank you. and participation and Thank your for

may You disconnect. now

Sally Beauty (SBH) 1 Feb 242024 Q1 Earnings call transcript