Sally Beauty closing 350 stores

Focusing on larger stores while Ulta Beauty plans for expansion

BY JEEHYE RA

Inside a Sally Beauty store ©Sally Beauty

Sally Beauty, a beauty supply retail chain, is closing 350 stores and two distribution centers in Oregon and Pennsylvania throughout 2023. Most of these closures already happened in December 2022. The affected locations are mostly across the U.S.  The Texas-based Sally Beauty has operated 4,500 locations in the U.S. and 5,000 globally.

Sally Beauty released a statement saying, “over the last several quarters, the company has been piloting store closures in various markets with the goal of maximizing the value of its large store portfolio and provide seamless omnichannel experience to its customers.”

Decrease in the revenue is likely a part of the reasons for Sally Beauty’s closures. According to the financial report for the year ended on September 30, 2022, its consolidated net revenue decreased by 1.5%, to 3.82 billion dollars. The report is contrast to the solid recovery of beauty and spa market in 2022 despite the Covid-19.

In the beginning, Sally Beauty opened small, 1,700 to 2,800 sqft in size, stores in strip shopping malls. Initial investment for a location averaged at 66,000 to 68,000 dollars. For customer satisfaction, beauty supply stores are getting larger to carry more variety of goods and provide various experience. Sally Beauty is likely shifting its focus from smaller stores to larger ones. Its move echos the most beauty supplies’ trend of scaling up the operation.

Ulta Beauty, deemed Sally’s competitor, is planning for expansion in response to its booming business. It will open 50 new stores in addition to the 250 locations operated in collaboration with Target. Ulta Beauty is set to have 800 locations after the plan.

Sephora is working with Kohl’s to open 400 Sephora shops at Kohl’s locations.