Sally Beauty Supply Closing 350 Stores
Retailer also closing two distribution centers as part of optimization plan.
Texas-based retail chain Sally Beauty Supply is closing 350 of its stores by the end of this year, as well as distribution centers in Oregon and Pennsylvania. The company operates 4,500 stores in the US.
A part of an optimization plan, the company incurred a $45.5M charge, including a $19.4M non-cash inventory write-down. The plan envisions savings of $50M in expense savings with an additional $10M added to adjusted operating earnings in 2023, according to a report in Chain Store Age.
“Over the last several quarters, the company has been piloting store closures in various markets with the goal of maximizing the value of its large store portfolio and provide seamless omnichannel experience to its customers,” Sally Beauty said, in a statement.
Sally Beauty said the distribution centers it is shutting down next month are smaller-volume facilities that will be transferring inventory to larger distribution centers.
The beauty supply chain has been flat sluggish sales despite a robust recovery in the beauty and spa sector this year. For the fourth quarter of the fiscal year ended Sept. 30, the company reported consolidated net sales of $962M, a quarterly decrease of 2.8%.
For the full year ending Sept. 30, Sally Beauty reported consolidated net sales of $3.82B, a decrease of 1.5%.
Data monitored by Placer.ai indicates that, as of August, foot traffic in the beauty and spa sector in the US was up 33.3% YOY compared to pre-pandemic levels. Some Sephora stores have seen increases in foot traffic as high as 45.5 per cent, compared to August 2020.
According to figures released last week from the US Commerce Dept., retail spending was up nationally in October by 1.3%.
The company’s competitors are doing much better, including Ulta Beauty. Ulta is opening 50 new stores this week, including 250 outlets in Target stores, the first phase of what is expected to become 800 outlets.
Ulta’s shops in Target are about 1,000 square feet and are located next to existing beauty sections at Target.
“We hear consistently strong feedback as we bring the best of our brands at Ulta Beauty at Target. As we continue to grow footprint, we remain committed to creating unforgettable guest experiences,” Ulta said, in a statement.
In February, Kohl’s announced that it is adding Sephora beauty shops to 400 of its stores.