Sally Beauty Holdings Announces Cost Reduction Plan to Fund Long-Term Growth Strategy
DENTON, Texas--(BUSINESS WIRE)--
Sally Beauty Holdings, Inc. (NYSE: SBH) (“the Company”) today announced
that its Board of Directors has approved a cost reduction plan designed
to help fund important long-term growth initiatives. This program
includes cost savings initiatives focused on organizational
efficiencies, sourcing of product and brands for resale, indirect
procurement, store operating expenses, and inventory management. As a
first step, the Company is implementing headcount reductions, primarily
at its corporate headquarters in Denton, Texas, which represent an
expansion of the restructuring plan announced this past November (“2018
Restructuring Plan”) and reflects the Company’s continued focus on
streamlining operations and improving efficiencies in order to drive
long-term profitable growth.
The substantial benefits from these new initiatives are expected to be
reinvested into market-competitive store wages; the acceleration of
technology investments that will improve customers’ in-store experience,
accelerate e-commerce growth and provide better visibility to
store-level inventory; and, importantly, initiatives that will
strengthen the Sally business in the U.S. and Canada by increasing focus
on its core hair color and hair care categories. These cost reduction
initiatives and reinvestment plans are all part of the Company’s
strategic plan designed to generate future profitable growth.
The new organizational efficiency actions are expected to generate
annualized benefits in the range of $14 million to $15 million, with
benefits in fiscal year 2018 in the range of $6 million to $7 million.
It is expected that the remaining work streams noted above will generate
further substantial benefits as the strategies are finalized and
implemented over the balance of the current fiscal year and beyond. The
Company intends to reinvest these benefits to support the strategic
initiatives noted above. The charges to be incurred in connection with
this plan in fiscal year 2018, consisting primarily of costs related to
employee separation and third party consultants, are expected to be in
the range of $15 million to $16 million.
The restructuring actions disclosed earlier this fiscal year (focused
primarily on the Company’s international operations) are still expected
to generate annualized benefits in the range of $12 million to $14
million, with approximately $8 million realized in fiscal year 2018.
Total restructuring charges related to the expanded 2018 Restructuring
Plan, including the international restructuring initiatives previously
disclosed, are now expected in the range of $28 million to $30 million,
the majority of which are expected to be recorded in the current fiscal
year, including approximately $6 million that was recorded in the
Company’s fiscal first quarter ended December 31, 2017.
“We have dedicated a substantial amount of work over the last several
months into the development of initiatives that we expect will generate
meaningful financial benefits, within both product margin and G&A
expenses,” stated Chris Brickman, President and Chief Executive Officer.
“We plan to utilize these benefits to maintain our profitability and
fund the key investments required to transform the business and
intensify our focus on our most differentiated categories - hair color
and hair care.”
“Our unique assortment and demonstrated expertise have established us as
the market leader in hair color and hair care, and these categories have
sustained healthy growth while other categories have faced increasing
competition. We will be reinvesting in strategic initiatives to
accelerate growth in color and care, which, combined, represent more
than half of Sally’s revenue in the U.S. and Canada. Similar to how our
Beauty Systems Group segment is the color and education destination for
the professional stylist, Sally’s primary goal is to have every customer
feel confident in her ability to color and care for her own hair, and we
will tailor our assortment, service and education to ensure we are her
go-to store for that purpose,” concluded Brickman.
About Sally Beauty Holdings, Inc.
Sally Beauty Holdings, Inc. (NYSE: SBH) is an international specialty
retailer and distributor of professional beauty supplies with revenues
of approximately $3.9 billion annually. Through the Sally Beauty Supply
and Beauty Systems Group businesses, the Company sells and distributes
through 5,177 stores, including approximately 184 franchised units, and
has operations throughout the United States, Puerto Rico, Canada,
Mexico, Peru, Chile, the United Kingdom, Ireland, Belgium, France, the
Netherlands, Spain and Germany. Sally Beauty Supply stores offer up to
8,000 products for hair, skin, and nails through professional lines such
as OPI®, China Glaze®, Wella®, Clairol®,
Conair® and Hot Shot Tools®, as well as an
extensive selection of proprietary merchandise. Beauty Systems Group
stores, branded as CosmoProf or Armstrong McCall stores, along with its
outside sales consultants, sell up to 10,500 professionally branded
products including Paul Mitchell®, Wella®, Matrix®,
Schwarzkopf®, Kenra®, Goldwell®, Joico®
and Aquage®, intended for use in salons and for resale by
salons to retail consumers. For more information about Sally Beauty
Holdings, Inc., please visit sallybeautyholdings.com.
Cautionary Notice Regarding Forward-Looking Statements
Statements in this report which are not purely historical facts or which
depend upon future events may be forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended. Words
such as “anticipate,” “believe,” “estimate,” “expect,” “intend,” “plan,”
“project,” “target,” “can,” “could,” “may,” “should,” “will,” “would,”
or similar expressions may also identify such forward-looking statements.
Readers are cautioned not to place undue reliance on forward-looking
statements as such statements speak only as of the date they were made.
Any forward-looking statements involve risks and uncertainties that
could cause actual events or results to differ materially from the
events or results described in the forward-looking statements,
including, but not limited to, risks and uncertainties related to: our
ability to implement and achieve benefits from the cost reduction
initiatives and reinvestment plans in multiple jurisdictions; our
ability to manage the effects of our cost reduction plans including
headcount reductions; possible changes in the size and components of the
expected costs and charges associated with the restructuring plan; our
ability to realize organizational efficiencies and expected cost savings
within the anticipated time frame, if at all; our ability to
successfully implement our long-term strategic and growth initiatives;
and diversion of our management’s time and attention from the operation
of our businesses.
Additional factors that could cause actual events or results to differ
materially from the events or results described in the forward-looking
statements can be found in our filings with the Securities and Exchange
Commission, including our most recent Annual Report on Form 10-K for the
year ended September 30, 2017, as filed with the Securities and Exchange
Commission. Consequently, all forward-looking statements in this release
are qualified by the factors, risks and uncertainties contained therein.
We assume no obligation to publicly update or revise any forward-looking
statements.
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Sally Beauty Holdings, Inc.
Jeff Harkins, 940-297-3877
Investor
Relations
Source: Sally Beauty Holdings, Inc.
