Sally Beauty Holdings closes stores, withdraws fiscal 2020 guidance
Mar 26, 2020
Denton, Texas-based beauty giant Sally Beauty Holdings is the latest company to announce temporary store closures and a new financial positioning, due to Covid-19.
As it temporarily shuts down all customer-facing store operations in the U.S. and Canada until April 9, including Sally and Cosmo Prof stores, the group is trying to proactively maintain its financial flexibility by reducing its capital investments, temporarily idling several distribution centers and temporarily furloughing elements of its headquarter’s staff.
Moreover, the chief executive officer and board of directors have reduced their pay by 50 percent for the duration of the Covid-19 crisis, while other senior leaders are also expected to significantly reduce their salary for the same time period.
Despite these measures, the company is withdrawing its prior full-year fiscal year 2020 financial guidance. It said it will not provide any updated guidance prior to releasing its quarterly results for the second fiscal quarter, expected in early May.
In fiscal 2020, the company was expecting its revenue to increase in the range of 1% to 2%, while same store sales are expected to see growth of between 0.5% and 1.5%.
Still, the beauty retailer is ramping up digital initiatives, as customers continue to be able to make purchases online and through the Sally Beauty app.
Customer orders in the U.S. will be serviced from inventory in the company’s national supply chain network, and the company is providing expedited access to further inventory by launching ship-from-store via UPS from approximately 300 Sally Beauty stockrooms nationwide.
Meanwhile, Canadian customer orders will be handled via the company’s new ship-from-store service from inventory in a limited number of Sally Beauty stockrooms in Canada.
As for Cosmo Prof and Armstrong McCall customers who are licensed professionals, selected products will be available for shipment from the company’s supply chain or via the just-launched same-day delivery service with Postmates from approximately 600 Cosmo Prof locations.
It’s also doing what it can to keep retail services alive with a curbside service model.
“Where permitted by regulation or local order, stores will transition to the curbside service model which allows customers to call their local store, place an order, and arrange a convenient, no contact, curbside pick-up at that store,” explained Chris Brickman, president and chief executive officer, in a news statement.
The company has access to a $500 million secured asset-based revolving line of credit, which expires in July of 2022. In support of its operations, and out of an abundance of caution, the company has drawn $395 million on this credit facility as of March 23, 2020.
As Covid-19 continues to cause disruption around the globe, the cosmetics conglomerate is one of many feeling the financial hit.
Coty Inc. reported on Friday that it expects to see a 20% decline in sales in the third quarter, resulting in a “meaningful impact on profit.”
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