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Sally Beauty Holdings, Inc. (NYSE: SBH) is an international specialty retailer and distributor of professional beauty supplies with annual revenues of $3.9 billion and net earnings of $272 million. The Company operates primarily through two business units, Sally Beauty Supply and Beauty Systems Group, and is one of the largest distributors of professional beauty supplies in the United States based on store count. We provide our customers with a wide variety of leading third-party and owned brands of professional beauty supplies, including hair color and hair care products, styling tools, skin and nail care products and other beauty items.
Sally Beauty Supply has 3,695 stores worldwide of which 2,791 are located in the United States (including Puerto Rico), with the remaining 904 stores located outside of the United States. Sally Beauty Supply offers up to 8,000 SKUs of professional beauty products for hair color, hair care, styling tools and nails through its owned and exclusive-label product lines as well as leading thirdparty brands. Sally Beauty Supply’s customer base includes retail consumers and salon professionals
The Beauty Systems Group business has 1,366 stores, including 146 franchise stores. Beauty Systems Group also has one of the largest networks of professional distributor sales consultants in North America, with approximately 748 sales consultants. The Beauty Systems Group stores and sales consultants offer over 10,500 SKUs of merchandise that include professionally branded hair color and hair care products, styling tools and nail products that are sold exclusively to professional stylists and salons for use and resale to their customers.
| 2015 | 2016 | 2017 | 2018 |
|---|---|---|---|
| 3.2 billion | 3.7 billion | 4.0 billion | 4.2 billion |
In last year’s letter to shareholders, I summarized our plans for our multi-quarter transformation plan with the goal of strengthening our position as the “Hair Color Experts” for both the professional stylist and DIY consumer. In fiscal year 2019, our global organization experienced enormous change as we completed numerous investments across the Sally Beauty Zoldings’ enterprise. At the same time, we continued to effectively manage the operations of the business and delivered on our financial plans for the year. I am extremely proud of the teamwork and efforts of our associates across the globe, both in the field and in our support center.
Our transformation plan was designed around four strategic objectives: refocusing on our differentiated categories of hair color and care, improving our retail fundamentals, advancing our digital commerce capabilities and continuing to drive costs out of the business while operating efficiently. I want to share the highlights of the progress we made in fiscal year 2019 against each key objective.
16 million active members and continues to progress nicely in terms of adding new members and increased redemption rates. In addition, we completed the installation of a new state-of-theart POS system to over 1,400 Sally Beauty and Beauty Systems Group stores and we launched phase one of a new merchandising and supply chain platform, which will dramatically improve our merchandising capabilities while reducing our inventory levels over time. We also started the process to optimize our supply chain by closing four distribution centers while executing a new lease for a large North Texas distribution center that is designed to serve operations for both Sally Beauty and Beauty Systems Group. Moreover, we implemented new pooling delivery arrangements in certain cities with the result of lowering our distribution costs while improving our on-time delivery to our stores. Lastly, in Las Vegas, we tested new store concepts for both business units with a focus on a better shopping experience and improved engagement for our customers through new technology, lower gondolas leading to better visibility in the store and enhanced marketing and product assortment.