Sally Beauty Holdings Inc. is cutting costs to fund growth.
The business said Wednesday that its board has approved a cost-reduction plan that includes “headcount reduction,” primarily at its corporate headquarters in Denton, Tex. Those cuts are an extension of the company’s previously announced restructuring plan.
Outside of staff cuts, Sally Beauty’s cost-reduction plan is focused around organizational efficiencies, sourcing, procurement, store operating expenses and inventory management. The changes are expected to result in between $14 million and $15 million in annualized benefits — for 2018, that number is likely to be between $6 million and $7 million because of costs related to layoffs and third-party consultants, the company said.
“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 [general and administrative] expenses,” said Sally Beauty president and chief executive officer Chris Brickman. “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.
“These categories have sustained healthy growth while other categories have faced increasing competition,” Brickman continued. “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.”