Sally Beauty (SBH) 1 Aug 212021 Q3 Earnings call transcript

Ladies and gentlemen, thank you for standing by and welcome to the Sally Beauty Holdings Third Quarter Earnings Call. At this time, all lines are in a listen-only mode. Later, we will conduct a question-and-answer section. Instructions will be given to you at that time. [Operator Instructions] And as a reminder, today's conference call is being recorded. to conference like to now would turn over the Mr. I Harkins. Jeff ahead. Please go

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

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

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

Jeff, you, Thank good morning and everyone.

and while and performance cash XX%, operational capabilities $XX operating gross The on We highlighted performance, put by We sales of a top above quarter increasing delivered quarter, enhancements of eclipsed in XX%, this to in of place. and restrictions, line. net the the solid pleased our many demand core which the navigate $X are and our report the to flow recedes strong speaks billion level closures believe in mark a by to million. ability markets. of third drive continue line sporadic consumer our strong increase was operating as bottom margins to pandemic teams execution we've We

quarter, be openings and store Canada to restricted Today, a capacity For closures unpredictable spate perspective, continues and stores experienced open across closings of of with Europe America, under Latin throughout Europe the operating except of during the small parts mostly and is a capacity. quarter. number restrictions we

macro a are have Looking stimulus disruptions variance largely early its the pandemic persisted, at factors, ran new course becoming in quarter, supply and reality. other chain

at business behaviors. desire While market demonstrating care. Despite particularly color pre-pandemic conditions, and consumers core in categories fluid the to increasing same time, of return an these to our are remains strong, our

are for experimentation For of notable self-expression. color who with resurgence a is great customer focused seeing a example, on the and deal in Z Gen we demand

life by driving YOU bright transformative brought a hair niche campaign, marketing category for what new power brings vivid and has our Wearing heightened fact, a the tool to to pandemic In among campaign make a beauty million color. of having previously Sally In customers self-expression the out XX official our celebrates at in our has become the generated editors tremendous. received TikTok Sally launching by consumers. been among our both video, Since for has was colors YOU hair our for creativity, June, than unprofessional coverage desire views. to the reaction campaign The colored extensive music and more doesn't has status. mainstream trade early you view,

this staying Vivid quarter, the prior demonstrating vivid QX, and year. emerging Canada increased During represented and Sally sales the by category. our in XX% category grew total at color of power Canada of XX% US. the versus XX% the and for color U.S. Sally colors

extremely reset the of we're pleased stores front results. during of the to all completed Sally QX U.S. and our also We offerings with color the

the the and and upfront, color year. was nails U.S. been at competencies our XX% during core care quarter, up positively. Other in customers versus in also hair BSG. fantastic, and which XX% look responding up Sally saw XX% and prior the up performed XX% We’re at care have showcasing hair with strength key BSG stores our also up QX, well categories Canada

other the to We going as the make new tell cycle see significant to pre-pandemic are priorities XXXX. bringing our to traction ratio remaining believe may have completing are our all two am a of quarters are one providing to retain tools our mindful has of leverage Those behavior. three elements and X.X continued experience in categories at omni-channel of continuing U.S. and of fiscal the over consumers our a that to and BSG we against for the leveraging activities, color we transformation, debt as important we to capabilities and mission progress substantially closer and consumer Sally to new within that an major service And influence Across variance view next strengthening include around Sally the with pleased out our customers customers how Delta growth to target while both further potential you return of recruit and our times. outlined this we driver. I gain robust segments, we the

in Canada in XX% our and Canada gain our That's of e-commerce QX. X% and quarter. suite XX% by QX sales were of In continues customers, BOPIS QX, approximately years. to in a had e-commerce net sales. to scale to traction omni-channel Sally represented e-commerce in full U.S. million see sales sales from services of XX% U.S. $XX and we total coming XX% fulfilled And the e-commerce and XX% comprised and growing the stores. continue we for of up global Sally As of optimize sales and

rollout we two rapid re-platforming U.S. Canada, the value are BSG, on currently refined territories. in in these and Additionally, which tremendous tested BSG delivery all to our introduced we've convenience options, At stylists delivery next Both and one fulfillment with being the new both rapid BOPIS and our fully operational website fully the testing our just to in of QX. being started expectation of Sally and which quarters. completed will of at schedule to and bring

Another significant a one in model. to at with their distributors franchise become of they coming [Regis], a development primary full partnership is pivot new will months as BSG the

significant We leveraging to opportunity the capabilities, omni have our experience customer. the digital deliver a superior continue to a while portfolio optimizing for store

Sally a the locations XX includes which in XX are reminder throughout and approximately We BSG the Beauty test, initial U.S. early of closure store stages our the XX of as

be and our inform Over the we'll markets proactively next engaging sales several path transfer our analyzing to in those months, customers with forward.

U.S. of capture is which and deeper us with members purchases is and to quickly pleased In total loyalty frequent drive is and and Private BSG Rewards the QX, XX% exceeded enabling from The tremendous CRM, community with U.S. data Another important sales area Label X% of focus approaching of more total exceeded stylist sales. interaction we're loyalty of customers. BSG program and how our Canada Sally adopting and one-year anniversary its Card. is our our

entire that expectation across Canada of and and calendar Turning end its and be our both represents Sally BSG the the network year. running the one with now implementation, across network, which be JDA up in by our to demand on of multi-year facilities currently and journey. final fulfill is across toward and will up the the U.S. expanding next we'll transformation elements running

the quarter, our reduce to in cash excess later. times, used third X.X $XXX million our below this leverage debt levels we over more from by bringing on Additionally, Marlo ratio

we exceptional chain time, we we figures positioning As year, persisting. new aware latest are are our same disruptions team and we and supply our capabilities months said, of and sentiment good have At about are approached the creating to uncertainty. the on place our pandemic final fiscal variance execute the feel macro consumer That that very the mission. in

Looking that fourth be at net anticipate approximately X% as flat comparisons the last near-term up sales picture, quarter normalize. will versus year to we

sales as salons the to in fourth quarter roughly flat the eased XXXX, of restrictions and pent-up first some fiscal reopened. the reminder, a quarter part net reflecting of year, prior demand in the As were

sales algorithm In retain in the laser we digit poised our achieve further beginning ahead, believe XXXX. long-term fiscal us Looking agree we focused particularly our and BOPIS low-single and summary, recruit are to driving personalization are is and to This same speed customer color says business Rapid conversion. and sticky We are of right mission driving lightening seeing now; and personalization. more couldn't that across with driving there are store vendors. deeply is and innovation, excellence, driving to our both consumer and customers, the on powerful our both new more convenience and more with drive delivery our tools dynamics success engagement operational customers. and customer play to loyalty wisdom and there given and how Conventional Visits, market, BSG. capabilities the key three remain our out utilize from through we're data Sally insights, and is horizon is. convenience and bonding excitement on innovation connect and

of work past long-term runway to transformation years set operating its upgraded has success. to not our Our the infrastructure has often four a It's for a up and rewrite us entire retailer that playbook. three

for more proud reinvent future of successfully a and us and there We work know growth. are plenty incredibly teams ahead of helping create business robust is our for the We platform questions. that, and taking but forward opportunity, to and is over then to now I'll look to our the we'll turn your scale. With financials, discuss mandate optimize the call Marlo to

leverage, recent cash customer capabilities net pleased units good strength exceeding and average highlighted gross report to were key implement in net results and XX.X%. fulfillment a billion, average other and traffic sales year-over-year the earnings by including of of Global total per solid reflecting flow. We're conversion million, increased were margins basis, as Thank and X% initiatives Traffic representing including our similar $X trends we at increase sales strategic reflecting expense ticket. quarters. and engagement. same-store around e-commerce was with unit to you, and transaction, On XX%, Chris strong morning quarter a continue board, scale The sales, digital everyone. our and $XX strong came ongoing sales to and also retail, driving across along year-over-year measures,

basis ability that's Beauty, last offset delivered Sally our to higher margin lower maintain to gross target profit, The solid BSG. XX% reflects at at of up gross gross partially margin performance level. reflects points by gross and Looking at year our increase, we a third margin above primarily quarter XX.X%, year-over-year XXX

as SG&A drove basis XXX in points with at the to a we expense XX.X%, in improvement year percentage expense, operating to quarter, of a an coming Moving compared sales of leverage ago. significant

line million, totaled in SG&A $XXX higher that's in the up second for last year and from quarter XX% is with our half. expectation Third spend SG&A

increase reflects spend in IT challenging the the to and furloughs have last As wage of in when abatements year. marketing, comparisons to current rent reminder, and benefit addition a we the incremental year-over-year year, inflations,

additional by Looking expense both a well operating driven to reopened, on and at QX, team for have notably increase territories basis, we expect investments year-over-year as our marketing. SG&A as growth, dollars and in international most sequential in primarily that

in adjusted in We the also delivered adjusted a came EBITDA performance to $X.XX doubled strong representing loss a $X.XX QX, year than operating earnings and margin adjusted was more XX.X%, of at XX.X%, $XXX period. of EPS in prior versus million, diluted margin

year, of XX.X%, increased fluid salons BSG across to level our At and million e-commerce sales now operations our this saw our margin sales with U.S. capacity the prior partially total all consumer markets. full large inventory the resulting in E-commerce sales from in margin inventory capacity operating Turning to service margin from of was in substantial impact virtually Beauty, sales our territories The increased BSG, that gross also the segment pandemic a the sales, demand prior sales quarter. totaled offset same-store the in as and and market volume, compared in gross restrictions pleased decline as conditions began and by general. driven year. XX-basis million strong totaled by in we increase coming margin results. at increases operating but volume international $XX COVID-XX margin. point to European to The segment, percentage customers write-down $XX the lower In impacts the Gross we sporadic of segment in quarter. XX.X% primarily of ability volume from recede. U.S. as for prior rebounded for and Same-store performance, segment in higher lower Sally We're closures a Sally achieve efforts, non-cash higher despite Beauty coming our the declined as as saw the sales increased clearance margin year's saw earnings.

in reflects In XXXX. $XX pre-COVID of the flow capital at had receipts. our zero utilized to outstanding agreement revolving notes and XXXX, million $XXX totaled flow, out $XX was and million. the asset-based million. At Moving free X.X% loan. and as cash under $XXX ratio cash timing call of the fiscal to stood we during in-line came putting we on our and line debt QX and the credit net we expenditures balance at X.X leverage out times. additional unsecured the and due end at operations cash senior we the of million and the revolving priority to balance outstanding flow years of agreement rebuild with reflecting our levels end, the an Capital on performance levels a excess the to million quarter, fully debt earnings extended strong sheet $XXX Inventories our from $XX back our inventory reduce $X million we inventory working right-sized repaying our the floating line of paying million, by our end requirements and the quarter, At totaled quarter, million our $XXX to cash of and May, asset-based rate is facility by of This third million. returned Cash on expectations new of May quarter the maturity by levels equivalents terms five term balance to The XXXX. credit. pricing $XXX cash laid QX of down our

For calculation comparison of agreements cite ratio often defined purposes, cash where X.XX. the the million net that for capped on is debt $XXX we was in hand as loan at purposes, our leverage impact

in continue with growth that strategic to focus our shareholders coming returning down pay on balance we'll maintaining and investments, to debt liquidity quarters. and the are cash We

from and cautious up to significant appreciate of well year, supplying your variance, last financial across Notwithstanding an where as around and As to we flat closures a net our to of the QX down year's balance due any That navigating and than potential as X%, we both regions. sales are our our view We disruptions, be less approach perspective. restrictions expect about to confident this the disruptions, all net we we any feel maintaining X%. to pandemic time QX chain operational said, were morning. sales positioning compared ability uncertainty continue

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

Instructions] [Operator of question And first will line Thank from you. our Oppenheimer. Parikh come Rupesh from the

is line Your open.

on question, nice morning, and Good thanks congrats for quarter. the our taking and

chain color on out the what color some up there you be Is And also So, just what of in it have are? of I get in, guess COVID you more terms exactly to risk some QX. provide supply there, can disruptions some your just just of built I on helpful supply guys chain of comments disruptions? the following Marlo, would around any think more given the

more Give there. bit Yeah. a little you

difficult think to as sure quarter-to-quarter. the I little are go just bit we comparisons make a

a strong as just in really QX, just So, backdrop, remember we had last to a year. quarter

time the over year year, was quarter remember was was demand, came last prior restrictions the some Sally QX especially of Given we've X% for QX heavy that first we and we you that time closures and the from of to XXXX. Back of up pent-up in Sally. that when last out compared that circumstances, that benefited

So, to overall, were QX. year's we last XXXX flat compared

but significant relates the look when go throughout low this lines production up versus transportation year, over did to pandemic, on pandemic. deal single our into that we're as as we've of to of expecting there's So, sales chain To long-term flat also the disruptions, grow supply time. at within we and bottlenecks answer not guide supply your to great team, reflective look last But is we in with QX little model, dealing and deeper especially uncertainty, the to year, be a the question, chain digits we X% delays, within disruptions from only the to our vendors. of disruptions it been supply the QX,

[loading] many even do we already we four putting stress that chain into backed on especially more as eight expect aggravate holiday, up even supply retailers next that as could So, are situation network. look weeks, the to more for

on us levels good those to categories have but But feel offerings, core line service are chain increasing is uncertainty related impact important for mitigate coming levels now. right play that's that our We most minds case seeing And then, the sentiment, pandemic has our degree. disruptions, continue our uncertainty to in obviously restrictions restrictions areas. already back focused some our headlines helped We're been in counts growing are closures pretty pandemic, we'll and the vendors, there planning. potential and we and from about certain as the global operate focus So, with could We especially mask meaningful bottom of certain do the that product our is improving variant. care. in color seeing across inventory we're our our markets. into factoring for There's in up, and in into consumer backing for that to supply to

did last sentiment, pressure see some optimism inflation And enjoy the now some further do in of so We consumer while U.S. including higher concerns. on quarter, downward levels we

pleased executing good So, is environment we continue but and month-to-month uncertain we have we proven track we The do choppiness are and resilient have we top and we being have are very we unpredictable fluid resilient, in and operate performance finish an a the the our that really navigate we during that expecting to of record categories times. these a with agile do QX, and ready as difficult year. news to to were line continue

then, I a day, the the you seeing I'm you variant noticeable related Okay, guess, impact sure not quarter if your great, are any Delta to that's color. markets? on helpful [indiscernible] really And comment in can

an would more and I we in but quarter, August of September think than We July. don't comment say, in impact in a it's

one maybe question. then, just last And Okay.

you gross about more think terms can of of in you Just is how margins QX, in there give terms and expenses? granularity any

Gross we talked Yeah. along target of about all proven at on staying record that. We've have a plus. margins, our we've track good XX%

that continue. will expect hold we So, to and that

wage we basis look we IT did we as at into investing also we the to we we spend an more and half to marketing sequential saw are at loaded. that inflation as spend a half increase expected have back As this SG&A also incremental we have the meet in markets as some back but you demand, spend open up facing line, QX, back then expected, back some on point,

at QX, pattern, look we and items as just from and bit to continue So, we're a the an that's I increase QX of year-over-year, will that have to we again expecting mentioned. again related

mainly We will and labor marketing international store have mean to and a wage or in quarter. also mode it's payroll and markets going invest difficult the back we into the our more reopen additional begin and operating will to reopen expenses again, to fully operating some environment inflation I put for as continue And customer scaling in that's digital we're up fully on pressure. spend and to incremental continuing also improve that our process IT again, as JDA then build platforms optimizing continue priorities, tool, to bringing experience. out North and and the the strategic the we focused Texas, facility our of online DC

you balance Thank luck the year. the of and for best of

questions, the for Rupesh. Thanks

Thank you.

to of Cowen. line And is go your line will Chen the open. We with Oliver

talk Marlo. to good you Chris Hi, and It's to guys.

[indiscernible] color the ... On

Good morning.

metrics to been about is key this thinking and and to how it BSG been more of just that and of versus the customers? you we respond has see thoughts applies you in you. fourth those your receive you're Sally fad color the been, that Thank as anniversarying evolution how just quarter guidance planning it love do a in Would permanent what's in and things proceeding not and innovation terms has how be happening which at will on comp and may also there, very is, … in terms traffic generally impressive or planning? question with

I don't and one take innovation happening. Why and just first the what's on color there

blonding. not So, but obviously, lightening much innovation we're there's of well. a seeing just color lot coming so also across visits, And and growth business, our there as very in in

in line coming early a the some bonding growth. coming There So, side that year. continues we've and terrific that's to drive on blonding vivid new market some of to QX innovation is got innovation great next

think total in is our business of although I So, to pretty in the XX% probably XX% color to continue the actually of a total. modest color going less than part States, grow, business, category the United it's it's

with color the say So, I when is it's I'd great that Marlo, I traffic who the for we lot feel think there consumers because overall to just market over and see confident plenty nice headroom grow it, that. color category, and coming are to become a Sally to to [indiscernible] that metrics, and to seeing the innovation now Z at let Gen of look come that, vivid On has for in to destination over we're of her it's is that's for of continue going the turn category growth. some indexing drive but take and

tempering given but uncertainty potential are But their the increases our metrics, continuing they for are Yeah, Consumers see we that when seem to the activities a quarter. reduce as with continuing get go to and in the this traffic, pandemic. restrictions. know, we some maybe to saw showing spending that spending positive had are see we trips, back to key you they're we and consumers enjoying that Unfortunately, the desire more out. to more before variants bit some willing be

expect to like comfortable, we said I they [indiscernible] back do in near-term, that to on be come So, that. the consumer we continue, once feel but the to going expect can pressure but we

quarter, Okay. inventory think your are what as supply or thoughts And will versus impact more Marlo the or fourth BSG disruptions for Sally there? chain we sales comparably? it And about

have will impact other second question? question. me to it's And I take let for supply to over both Marlo Why probably some going impact don't turn it Oliver, businesses. impact QX, but chain, think more I will BSG in across the it the

other were back. inventories, us this of working you've But been throughout build this good too some It's reasonably year We heard talk investing into Yeah, of hard part well, were levels the we've gone year inventory. we to reasons than supplier that for disruption. last right cash. at back spent – [left] low in the the we really – terms of for year managing

I good like we're place. said, So, in a pretty

and stock disruptions. customers to and have successful products, still over we improved alternative working have for positions, pretty we our service had some outages. We've in are areas but those the moving We where been through levels

at inventory continue of we'll of look be obviously the, expect to year, we the but is be demand end bit expect the forward. last go will better mid-XXXs, position we as from the improving As a which in in sales quite kind to much up year, we a low to meet the we

you. Thank

proactively imply are Lastly, sales for well? what on might What or that acceleration the commentary parameters acting to thinking the manage analyzing broader in for transfer your are deceleration transfer and terms And about thanks risk managing the and maximize just what about over closures of and and fleet? you're thinking you what of for on that. thoughts look as

store. is either track and either also store another another see XX store to online an customers. they we're they store online. do becoming follow Great shift encourage communications we at up don't or them question, to putting running We're did to contact purchase XX, shift customers in before we nearby shift another store the XX, to to And If shift try them with continuing customer. and how then many store program to integrated or another them and signage Oliver where a obviously in very got after store closes, we're and now the appreciate contacting days We it. We're closed. up We've store.

have we sales the program. it's real integrated driver want then to confident driver, of November based and a from data. do we And on That and set the very And draw right or feel most can in exactly being of statistically that capture then we as that a The beyond And so fully we optimization we transfer. planned said, the significant the work it's work into you're data. the get going to program as is the terms we important and better. sample we'll size

regards. Thank you. Best

You bet. Thanks Oliver.

you. Thank

with line and go the your of Altschwager Baird. we'll is moment Mark One line open. to Next,

Great. my Thanks taking for question.

it's So your you're versus algorithm that sales single X% that in I you the some growth saw guess bit ongoing during longer-term that of growth that primarily to? digits, of see the of I spend pre-pandemic of any guess stimulus other initiatives about I disruption you is low the or quarter. normalize? potential of the chain the levels, in the flat quarter despite the growth fourth factors and expecting And the model mean looking momentum is of that color a some ahead of target XXXX do fiscal to other given in disruptions the supply attribute underway, exceed you'd ahead some presuming ahead

time were down a and opened and significant clearly Yeah, puts quarter So, a the so Canada only of stimulus in Mark, shut the this there some April. also lot is for takes early There mid and period up saw of UK as impact disruption noted were was in quarter, some right? there that. you we like places salons where

are been is progress that worry term over and going it lot it's this off tougher quarter the Make mean, that service headwinds in make is exceed have to maintain some a working chain algorithm disruptions making and obviously and our that right were the to some serve this of job same-store of all be supply getting way. next costs. along P&L that's to is, quarter. And we're the will takes P&L work sales our cause coming try way, yeah, digits right right labor and that. puts in exceed seem obviously I to that The that lot And caution What really a headwinds there to in the our a there and to we going We've long the be So, the place we setting lines to reality quarter may that our to fact headline lot at the the capabilities sure we're Delta is tools in time. quarter. But that into building up the and customers want low to loss, a short then this single-digit of cost especially will throughout of the set number levels at top. obviously, getting now more and term worse. we digital sure us make But do mitigating algorithm. gives be work low improve one single that progress is

may there to Marlo, anything but we're up you the thing have work there, So, know doing one some P&L at if number is level. don't the be setting to I that add? upside

think I no, you Yeah, did.

digital levels EBIT talk of a at Is And structural factors through about below. front, with Beauty BSG? rate basis or pre-pandemic some BSG? to but path for That's points a Can there hundred the on it's changed the tracking Great. anything margin Sally be the back margins us thinking how couple should are we exceeding shift helpful. given the of that's margin BSG still play mid-teens here you

I That and think I so happening. driving definitely pandemic with margin line see relative gross it comparison. in [indiscernible] to plus the were you e-com the up not stores into service. mix business that channel was we last much mix mean, time a year Yeah, seeing a looking at really highest the was of up to There and that margin you full this probably is XX where margin.

online. that back normalizing coming see Now and you services full

we way, on expect the that merchandising full-year see that starting on standpoint, and margins on along should and takes basis, now we is gives putting improving capability target that's XX margin XX And is And scaled those basis. a team got as sub forward from There we some both tools. operational. capabilities margin us, quarter a BSG basis, year what a platform. XX back the were now have that but BSG. – So is well a business. on as see do puts us confidence JDA scale be now do our in have to the going XX we We've and range. into full to just in will gross in to that for team a that for the we or BSG this

margin. to can that XX, that'll right confidence we JDA we So, sophisticated down into distant plus and that more promotion back gives bring range and not that too future as tools optimize operating to XX and margin that BSG gross transfer the the pricing us world, we'll get

Great. of detail, Thanks the best for all luck. and

Thanks Mark.

Thank you.

go we your And and Jefferies. Please moment, line go One your line is line ahead. the open. Wissink is Steph, of Steph Next open. will to with

wanted follow prior everyone. margins. margins neutral? of kind related or through burden of that is up Can of BSG just think contract? large help you the I to Mark's Hello, multi-unit BSG just us as the good a contract on somewhat integration gross to Does [Regis] morning question the

headwind It But headwind profit is that, but – mix details provide of more then upside, terms operating a it the but as is size in a we'll on margin. headwind mix a and at we of we that still pointed out, volume additional despite of better management margin. BSG expected get lifecycle, range back ins outs and that product, management can a lower that promotional slightly product of to XX Marlo

tracked a of Okay, yours but question that's pre-pandemic of played then it helpful. your reporting kind back how still kind We've penetration some elevated, a versus e-commerce, plan? internal curious And e-commerce on to, seen retailers levels. just I'm

it's bridging I think to is curious just X% about in that we internal how think relative to So and XX% your call? how your e-commerce plan should penetration faring

Yes.

above So, you thing, I didn't one correct to want well We're grow just We levels. do still back level. didn't on sequentially. a pre-pandemic track to pre-pandemic it

as improving of I on during been products is on totally margin the know, obviously. more service headwinds a the made improving we The get profitability minimum we've that. the that a of go rush market of lot and them e-com. and focused to launched and the delivery models and feel experience digital new we've work reality both customer So, like We really launched the a in to lot viable pandemic, when is, that you we

we've few get do time and a getting the right profitability the why the lot And and over we'll really of experience that's think over quarters, three reason now. the that right part improving seeing we But we're spent believe can not e-com. sequential we of we of customer growth. the to next double back that's growth last the why penetration of So years, kind

Okay, thank you.

You Steph. Thanks, bet.

you. Thank

the Tong with to line will Raymond And line we is of Next, James. go Olivia open. your

terms bit or little you. vivid see terms little risk more from color studies wanted – in or surveys bit you've Thank just more that they is else the give or about a forward have the hair demand of that longevity to of just, be whether of fashion And and and if it's more So, you you're us done Thank from a there what ask trend to to sustainability what pivot Good little helpful? anything talk you? over-indexed I about in share drive bit and morning. fashion going and and a that Gen-Z are the you I of actually here focused, would their hair your a the pure that innovation your relative quite of positives you face that and not is that of don't that know something a and thoughts if risk sort upward category doing terms you. color the cycle in the could given retailers. but to now of It's eventually? strong,

all a is we Yeah, is, well especially although in vivid, the what into customers, interesting see it's buying of consumers. I good And centered that, to Olivia, than point. although think it that I believe broader Gen-Z, bell Gen-Z is think it's stretches is who's really among reality curve it's the that

are even it. we In fact, and surgeon using who have in their customers XXs XX

going of where to I a are I want employer the themselves. want So, by or what present seeing work, feel I themselves, emboldened not this educational set you're more facilities and just be do the to to I trend a accepting where lot free another. long-term I that they rules express I for think way, be desire themselves a should institutions a much hey, And and there to however that people want, more presenting whatever. and self-expression that's go are one and by they companies way people that's much And societal is by becoming confined driving of feeling and school like think schools to think I to

vivid That over-indexed their consumer They're it treat to they're And consumers store I that Gen-Z hair. legs younger consumers products, versus is physically a generation see buying – because of home. trend. category exciting, think that for at to lot new us the digitally a in the survey Pro and really experiencing of not think place Sally other to is there's store. in whole DIY and color products recent in in is it's they lightening they're it's So, retail actually colors, both I with recent to and teaching a nice do the buying buying being just bonding about said, the see other side

bonding the just side same I coming And have bonding around in color So and And overall, well. innovation as terrific up all QX. energy it Sally that bonding a it's coming, early to new seeing some in vivid think innovation well, create terrific – the category, pro in you by the line coming these especially trend And be There line as I a the of some at back into positive in you the is and think great tremendous growth we're color terrific the way mentioned. lightening the time gives added vegan categories then and just with innovation stores there is opportunities. stores more lightening. in terrific

in. like that feel So a we category have a strategic advantage overall, I it's

any retailer. We have other than assortment a much broader

have online. the as expertise well process, through digital expertise as much more consumers to We in store coach

to so full can learn opportunity experienced as for younger store equally customer Sally a them the of we them. and to provide about and think let importantly the it's continue a share options array capture for And I great us who's to to never bring continue

think or be margin up up be Thank Marlo the of for SG&A sequentially. point sequentially Do going mean clarification, very you you, you. sequentially QX That's up to was I said that will helpful. QX? for be one you the will dollars

Dollar.

okay. Dollars,

Okay. it. Got

Thank from it that's Okay, you. me.

Olivia. you, Thank

you. Thank

comes the Simeon Gutman Stanley. next Our is of And line open. question line Morgan with your from

good Hi, morning. [indiscernible] morning. this for Hope actually Simeon you're well. is all This

– First thinking do run sort question, there? forward about you think appropriate on we, close of SBS sort that's and guess of should I or takes puts going margins rate other XX%, to be their

Sally in been that about we're strategy promotional where on margin I really, throughout we're driver of – The quarters, of front. lap last Yeah, and the strong the last was think now, started year. a earnest been really to several shift – that started in our has really QX about biggest we year it's it

so, sustained it's pretty going margin been a forward. And much

the will But good, On online mean we the think the of come feel I businesses basis, contribute to back So, margin. Sally, mix and that down. but continue to an to overall pretty to businesses international it's expect they we strength strong. stay as I the going BSG

Okay.

Hey, Simeon. it's

sorry SBS guess, – way the I I versus the existing to about parse you about and if tag and I ask business team. Chris, know, to new out the on talk jump how to Sorry any don't customer you. they're mix at shopping U.S., could the in wanted this, look anything to for we surprising

base visual a community is that's priority a a forward. as to I store merchandising mean, and clustering, local diverse have is, of us store so very But customer. team customers, need our opportunity we – which – for about side continued the the But have a in store customer penetration interesting big so big segments. see And tailor the the and these highly big the do for both more I real and reflect I local Yeah, shift. we increased diversity the is us is that the just on much that penetration changes I diversity think and as and think and to thing well and really expertise, is the as a the incredible assortment to drive talked need is especially with stores young clearly most Gen-Z, – it that, remains the meaningful merchandising biggest that. think our diverse the even one is with is data other way something, going working of store high to and the customer a result store that and

if low guess saw in I to get digits I single back to you And I expect – your – fiscal XXXX. know,

a or COVID? was that If existing reflect of know – and with I versus that's in existing newer mean category a but early customers. little of rate I sort of new business getting say post back I is get out terms is new. patterns to could these it's and pretty run to low-single-digit be Does that customer, and there, continuing come now steady getting you're your the what it's let's it a

a We not, we'll think coming me, year. be clearly who last mean and be, out, find bout hopefully we don't we knows. Obviously, excuse us or how don't chain it labor at will Simeon, I Yeah, will supply our of last we're going disruptions have with is to with know lot next whether inflation. but COVID this dealing I things long know

all trying there. to up that we're the operate And digits successful number set working obviously, really low-single to And at and that be that. be to P&L of so exceed with we'll

targeting able to So, and modest years, it's we've years last exciting And relatively our need bringing capability and it will some a And to whether to put capability way to of the three comes is with and we that's all and a disruptive top the which disruption. of going years place at the P&L and exactly to come to can in to to That That's being the year off four investment implementations year, lot maybe. nice it part, be for of actually work bear that see cautious capability that and in deal we whatever kind capability, finishing next capability. terms on said, CRM number fruition, be business. in be think for, bear all set so in we're working be additional digital I bring up XXXX. merchandising been line we've all to what of that

much. Take very thanks Okay, care.

Thank follow-up Parikh line from Rupesh do open. you. have And Oppenheimer. your the is of from a line We

follow-up question. taking Thanks my for

curious are prices guys expect just to you vendor what on guys pass history? increases? see you And well? curious So, as higher right just now price the seeing if And to you're I'm if front, vendor forward through starting I'm going level versus

Yeah.

of number to pass business the price do will happen the expect a months. increases through. and those next few Many of we those sides expect We of vendor on in both

end others will of year. the already get the of happened happen we toward Some and as

cost products well we So, we to and expect through on are well. take obviously it pass fully seeing our that own inflation we there as as and now experienced as pricing

just we year-over-year. Great. promotional a – And then front, more have more of few sort follow-up promotions maybe the on one --

are the just a get in at then seeing you sense, quarters, to discipline guys its and is wanted that backdrop just on in it Sally overall? look any had of you what thoughts guys recent continuing. promotional there if you I the seems doing like just have promotional So, But terms what

You don't at business in stock we customer think see the on need know, We that many expertise, just across right home Sally or our Rupesh, a experience, to many activity brands than and Sally focus so use contracts be nails color any that's it's so because the delivering great so being is I also Right great then expectations. in we executing customer the on think pro color have for promotional exclusive unique activity. core because we're Sally that is only and promotional on we're now so of exclusive the we're it's those important one in professional many care and more BSG now. laser-focused categories, supplies. and whether categories whether of increasing The that in reality sells or

Thank you. Okay, great.

follow-up a line you. have And line open. And your of from the we Thank Oliver Cowen. with Chen is

you. Thank again. Hi

is for of you. another disruptions the what's you JDA good terms chapter are be? you relative in ahead chain a what and there where stores? those to or doing in place to supply store post on Thank of very will are at attractive. and And debt of terms well, down large? allocation with shareholder pay thoughts priorities the then your What stores innovation just and flow cash your the ahead how Regarding you it's returns in and and as planning want with And you're and minimize systems been

I'll start on the priorities.

the us that more the As important remain behind of have now a conservative it's on macro you really laser-focused and and been is pandemic think we know, to still maintain removed. strategy until fully uncertainties the pandemic, some we liquidity throughout right

on a balance position know, right we the of As now. progress deal made great great a you sheet. We're in

investments the down in near debt options some up debt good in coming down continue pay have we'll prioritize growth to We coming pay and on and term. the year

stabilize, we now out of and we path point. but remain this the value to begins environment evaluate and conservative best continue optimal to pandemic again evaluating come to be we'll think the it's return at So as to right shareholders, to

that continuing At complete our to And stabilization systems. the disruption is on leveraging store which great, activity disruptions do then of fully but think result store a in rollout significant Oliver, to don't this we're terms our point, of to hope system and think these supply in and to fully leveraging be no, tool, I activity. have our meet new customer as JDA fully terms need to leveraging we optimize don't going of in tools, that needs. further seeing tools fact, clustering, of are our And overall chain I our will store I pricing disruptive CRM in ability we and to store be going

fully we So, in. And think that optimize, the mode will we're lead value to very the much get tools out into over scale, of capabilities invested of and consistency now time. full we've more

e-commerce you've this were you the basis. focus and convenience on know, your comments as ongoing an been Okay. customer And doing also on helpful

need or continue to to we offer well? are So, terms digitally what convenience what on on you as in focused and make the that should profile moving on to focus you of margin sure e-commerce, as

that of that couple convenient just progress time. work last delivery And of lot quarters. really the able set options work is and consistently a just being the made lot in actually up to We've of first here a

delivery you're warehouses that is from get in yet the as also have time. is all shipments. that consistently we delivery Rapid And for first margins supply is much so much delivery one order not [BOPUS] cost it fewer rapid A, we that customer. full from delivered customer effectively with inventory better ring-fenced value create splits, your it the so out reduces or which quite are as splitting in and a B, a get the they at the because store because warehouses shipment possible. service now and So, high and BSG, lot very We've obviously model from rolling Sally, profitable. our those of to, centralized really close

but here think of optimization a the lot and have So, We'll progress been done continue real a there's made few of the optimize lot improving to that, significantly our right now focus side. full warehouse last in been is, we've margins on e-com the I quarters.

we what our that customer great right service delivery e-com how to on store of effectively create to is focus bring models to that Now, some going really – new at value want these but do do really about those equivalent excited the now. for getting are margin, can forward. market and what we do I'm we're business commercialized

on Thank as past, like a are in what been focus and the the as about there customer base. very return you on areas acquisition lastly, next sure spend you're others? on focus marketing decisions well But the TikTok In channels your are you. and thinking cost ad list how modernized. new And and was has making different relevant and customer

now, which close on we right eye Buy do programs of so really and to way doesn't micro are traffic engage working new additional And on our that and influencer spend Sally the was. really campaigns inspire our hair like a we ideas to customer. that really the associates, YOU target unprofessional that we're how having affiliate then programs putting many team was colored also marketing so some you that they're Oliver, including now, Yeah. spend are something the channels make organic, TikTok is drive broader customers. inspiring it's how right The has to do great

So, now. with happening I'm by what's inspired our marketing right

us see exciting cost, these to lower penetrate more way, it's about new channels more takes some organic cases, in very actually to it. think I do a be much it really creativity It's just it. authentic in

that especially much in you'll shouldn't like customer think I And we're I given Gen-Z a going it and And the going powerful. that you for to Sally things lot see cost that in much more is in to YOU areas, investment acquisition joined our us growth more up, a make there in in you're more I be stores. those York. Buy but some So TikTok opportunity of think see do seeing think the event great authentic more New

regards. Best you. Thank

Thanks Oliver. bet. You

no I'm And you. time. this continue. Thank showing questions at further Please

some thank we about we've To Business might the navigate those like that is end, categories where excited quite have to have of the additional we're our that the at we today. joining Obviously, really we but everybody business. We're proven short-term, in and navigate really for trajectory us headwinds I'd and resilient. healthy. to can are

equally optimistic bear we've much. as made in we're business the set is business all the drive investments four to that. how to the going So, very the future and over and and Thank we're to we're bringing excited you about growth of ready years do last about

Thank Executive you. conclude call for and your your you and participation Service. Teleconference does And today. ladies for gentlemen, that for using AT&T conference Thank

now disconnect. may You