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Sally Beauty Relaunches Brand, Focuses on Transformation

Zacks Equity Research

Sally Beauty Holdings SBH is gaining from its Transformation plan, which is aimed to improve customer experience, strengthen e-commerce capacities, curtail costs and enhance retail fundamentals. Moreover, the company is undertaking prudent acquisitions and partnerships to strengthen brand portfolio. On the back of these upsides, this Zacks Rank #2 (Buy) stock has increased 43.8% in the past six months against the industry’s decline of 9.8%.

Transformation Plans On-Track

Sally Beauty is on track with initiatives to improve its business. Recently, the company relaunched its brand with a bold new identity and multimedia campaign. Moreover, management highlighted that customers will be able to enjoy a new store experience that features AI technology and updated point-of-sale (POS) systems along with refreshed brand messaging, improved wayfinding and better trained associates in select stores. Also, Sally Beauty launched its mobile app that supports features from the company’s mobile-first website and its loyalty program coupled with exclusive in-app offers.

Moreover, Sally Beauty’s commitment toward its transformation endeavors is well reflected in its innovation and product expansion efforts. To this end, the company has launched brands — My Black Is Beautiful, All About Curls, the exclusive lines of Mo Knows Hair and Vernon Francois as well as Kuul color line — in the past.

Other Growth Initiatives

Sally Beauty has announced modernization plans across its supply chain to optimize inventory levels, minimize costs as well as bring latest replenishment and fulfilment centers. Also, the company expects to initiate cross-banner store replacements and e-commerce fulfilment operations.

Further, the company will upgrade its e-commerce capabilities at the distribution facility in Columbus, OH. Management also announced the lease for a 500,000-square-foot location in Texas for building the latest automated and concentrated distribution facility. The unit is anticipated to start operations by second-quarter fiscal 2020. The center is expected to serve Sally Beauty Supply stores and drive e-commerce sales. The company’s efforts to modernize supply chain along with ramping up the rollout of its Oracle-based POS systems and revitalizing Beauty Systems Group segment’s e-commerce site bode well.

Moreover, the company is undertaking prudent acquisitions and partnerships to strengthen brands. In this context, it acquired certain assets of H. Chalut Ltée to expand its business in Quebec province, giving BSG a footprint in Canada.

We believe that the aforementioned upsides are likely to help Sally Beauty maintain its solid position in investors’ good books in the future.

Looking For Retail Stocks? Check these

Chuy's Holdings, Inc CHUY, sporting a Zacks Rank #1(Strong Buy), has a long-term earnings per share (EPS) growth rate of 17.5%. You can see the complete list of today’s Zacks #1 Rank stocks here.

DICK'S Sporting Goods, Inc DKS, with long-term earnings per share (EPS) growth rate of 6.5%, also flaunts a Zacks Rank #1.

Boot Barn Holdings, Inc BOOT has long-term EPS growth rate of 17% and has a Zacks Rank #2 (Buy).

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