Sally Beauty reported a sales decline in the second quarter, pointing to the coronavirus pandemic leading to the temporary shutdown of virtually all of its global stores.
Consolidated same store sales decreased by 7.1% for the entire second quarter ended March 31, as a result of the COVID-19 pandemic leading to the shutdown of virtually all global stores in mid-March. Prior to March 12, the COVID-19 inflection date for the company, same store sales had been up 4.7%.
Consolidated net sales were $871 million in the quarter, down 7.9% compared to the prior year, driven by an initial increase in same store sales, followed by the rolling shut down of customer-facing operations at almost all global stores starting in mid-March.
The company said it has experienced significant increases in demand on its global e-commerce platforms since March 12. In mid-March, the company more than doubled its ability to service e-commerce orders by rapidly expanding ship-from-store into the U.S. fleet on a rolling basis. As of today, the capability is now enabled at approximately 1,100 Sally Beauty stores nationwide. The company also separately doubled its e-commerce shipping capacity at its distribution nodes in the U.S. and Canada in the last 30 days.
Net earnings in the second quarter were $13.4 million, a decrease of $52.4 million, or 79.7%, compared to the prior year.
Sally Beauty said it began re-opening its stores on a rolling basis on April 16. Store re-openings are triggered by local regulation, the adoption of the company’s new COVID-19 related safety protocols involving store cleaning, masks, gloves, limiting customer numbers at one time, and in-store social distancing guidelines, as well as the recall from furlough of sufficient store staff.
“The company was on track for an excellent quarter, having achieved important milestones in its digital and retail transformation. When COVID-19 struck, the company accomplished an incredibly adept pivot. I would like to recognize the amazing people at SBH who in a few short weeks pivoted the company to dramatically reduce our cost structure and manage cash, aggressively reinforce liquidity, accelerate the roll-out of in-demand delivery service models, and manage through a massive increase in online demand,” said Chris Brickman, president and CEO, Sally Beauty. “Our teams, led by our store and distribution center teams, are the real stars of this story and because of them we expect to emerge as a transformed enterprise with a much larger digital footprint and an even stronger competitive position in professional hair color and hair care. In addition, with our recent capital markets transactions, we believe we have enhanced our financial flexibility and are well-positioned to survive a prolonged downturn and emerge from this crisis stronger.”