Q3 2023 Sally Beauty Holdings Inc Earnings Call
[music].
Good morning, everyone and welcome to Sally Beauty Holdings conference call to discuss the company Cisco.
2023 third quarter results participants had been placed in a listen only mode. After management prepared remarks, there will be a question and answer session. Additional instructions will be given at that time now I would like to turn the call over to tap Harkins Vice President.
Relations and Treasurer for Sally Beauty Holdings. Please go ahead.
Thank you.
Good morning, everyone and thank you for joining us.
With me on the call today aren't Denise Pelotas, President and Chief Executive Officer, and Marla Corby, a chief financial Officer.
Before we can.
To remind everyone that management's remarks on this call may contain forward looking statements within the meaning of the private Securities Litigation Reform Act of 1995.
Actual results may differ materially.
As indicated by these forward looking statements.
As a result of various important factors.
He knows discussed in the risk factors section of our most recent annual report on Form 10-K.
And other filings with the S E C.
Any forward looking statements made on this call represent our views only as of today and we undertake no obligation tough day seven.
The company has provided a detailed explanation reconciliations out of suggesting items and non-GAAP financial measures and its earnings press release it on its website.
No I'd like to turn the call over to Denise to begin before remarks.
Thank you, Jeff and good morning, everyone.
Three quarters indoor fiscal year.
With our operating plan in the financial guidance, we laid out at the beginning of the year.
From our Sally Anne B S. G customers remains strong and our poor color category is growing in both segments.
Two three we delivered net sales of $931 million and strong gross margin performance of 51 per cent.
Additionally, SG&A expenses were below prior year supported by continued focus on cost efficiencies and they realize the benefits of our store and distribution center optimization efforts.
As a result, we live or third quarter, adjusted EBITDA of 119 million and free cash flow of $32 million.
Oh I lost earnings call, we noticed some softening of transactions and ticket Sally beginning in late March and continuing into April .
<unk> picked up and May have remained relatively study through quarter is.
While our low to middle income customers continue to spend in our four categories as tolerant care.
The limited or basketball.
Main conservative on what they consider to be non essential purchases.
In turn it Sally comparable sales increased by 3% will confirm the transactions were flat.
With average ticket up 6% driven.
Driven by average unit retail prices up seven per cent.
[noise] units per transaction down one per cent.
Total color sales increased 3% and care, we found one per cent, which includes the impact of store closures.
Color continues to see strong momentum met Sally with great coverage up 10%.
Turning out to be S. G comparable sales decreased by 2%, reflecting a continuation of stylists demand trends, we've been seeing for several quarters now.
Comparable transactions were up 1%.
Average ticket was down 4%.
Joined by units per transaction down 10 per cent, an average unit retail prices up seven per cent.
From a category perspective, total colorfield increased 1%.
Her with found seven per cent as we watched some product launches in terror in the prior year.
We're pleased to see the resiliency and transactions and color scales as both key performance indicators reflect the healthy ongoing engagement, we have with our customer base.
At a time when macro dynamics are impacting spending on consumer goods, we remain focused on our strategies to support the longterm growth through our core sharp strategic initiatives enhancing customer centricity.
Driving innovation and increasing operating efficiency.
We're seeing good traction in the early days of this work and feel confident that our strategies will continue to build upon our modern and dynamic retail platform that will take us well into the future.
Before I provided an update on several of the initiatives that we previously shared I'm thrilled to tell you about our newest customer centric growth initiative the launch of our happy beauty co value concepts.
This concept grew out of our focus over the past two years to drive top line growth.
Best serve our customers and expand our reach.
And our journey to build out our strategic initiatives to grow our core businesses. It became clear to US that there was also ample opportunity for an engaging beauty experience with a value price point offering.
Happy Beauty co was developed to provide quality beauty at great prices and an accessible fun and expressive environment leveraging our understanding of the industry.
[noise] extensive capabilities across product operation sourcing and supply chain.
All of our merchandise is priced under $10 and products offered his accomplice for key categories.
Cosmetics and facial care.
Bath and body nail.
Mail in here.
Our offerings will be comprised of a strong mix of entrepreneurial third party brand and our own proprietary brands.
With our strong track record of Protestant brand development will be exercising this muscle to bring our customers compelling value alternative to well known premium priced products.
At the same time will be partnering with smaller vendors, who view this as a valuable opportunity to build visibility and drive growth for their brands.
Our target demographic includes savvy millennials value seekers and discount beauty buyers with an average income under $100000.
The concept tested well in our focus groups and we're excited about the opportunity to pursue a new Avenue to drive longterm profitable growth.
Over the last six weeks, we've opened three pilot stores.
Two in the Dallas Fort worth area and one in Phoenix.
We plan to open an additional seven stores over the next few months she'll have a total of 10 pilot location.
It will serve as a learning environment for us over the coming quarters and allow us to assess the long term potential of the concept.
Yeah, let me provide some additional updates on our ongoing strategic initiatives.
Starting with customer Centricity.
Are 17 million active loyalty members accounted for 78 per cent of the sales S. Sally U S and Canada in Q3.
At D. S. G rewards credit card purchases represented nine per cent of sales for the quarter.
We're pleased to be holding our Sally loyalty count study after executing roughly 350 store closures and our teams are deploying strategies to attract new members going forward.
Notably feels transferred in line with our expectations with more than half of our customers impacted by a store closure spending more with us versus a year ago.
In short, we are seeing them more engaged and valuable customer Sally.
R virtual color expert program, which we're now calling license colorist on demand.
It's currently in 75 stores and continues to perform well with great customer response and feedback.
Customers utilizing the service continue to have a higher average ticket and higher net promoter scores that are already strong baseline.
Additionally, I'm excited to announce that this program will be launching on R. E. Commerce platform later in August and the state of Texas and Ohio.
We expect to have this rolled out to approximately 20 states by the end of this fiscal year.
We're pleased with the trajectory of our studio by salad concept as well which is gaining.
Momentum in its initial months as customers experiment with all aspects of the forlorn.
10 full extension to simple children.
Customer feedback has been positive, particularly around education inspiration in the digital experience.
And you just for transaction are trending above the Sally fleet.
We are on track with our expansion plans for the coming months and expect to open five additional location prior to our fiscal year at.
Moving to B S G.
So on each cube entered its next phase of maturation, we made the strategic decision to reboot brand rebrand at the platform as Cosmo profit direct.
During the quarter weeks, please stand as a platform to an additional seven states and then Q3 with nine states and more than 1700 storefront.
Or stylus are embracing this new tool and gaining a deeper understanding of how they can leverage this resource to profitably grow their business.
Moving onto our second strategic initiatives product innovation and owned brand growth.
Park innovation continues to be an important growth driver at both Sally and B S. G.
In Q3, we saw strong performance that B S G from new product launches, including Amiga.
Well as ultimate repair endanger Jones.
As well as expanded distribution with color while the.
B S. G continues to be robust we of newness coming in color hair and nails across key brands.
In color. This includes news right Hughes from Paul Mitchell.
Raised in a silver tons from matrix.
And it continued focus unblinding, which is a consistent traffic driver.
Additionally, this month the issue will be collaborating with schwarzkopf on their exciting partnership with the iconic Barbie franchise with a focus around like nurse, including Barbie Dream Foreign kids and homes bucket.
And the care category, we have new that's from old Paul Mitchell and color Wow.
At Sally well, bringing innovation across color nail tool and textured hair.
This includes two of our highly successful and brands bond bar in Strawberry leopard.
On the heels of our initial successes Walmart will be interesting do sing a color line in September which is among our biggest four inches of fear and plan to be a sizeable business for us over the long term.
Of Newt Bandara is resonating with our existing Sally shoppers, while also bringing in new customers.
20 per cent of our bond Mark customers are new to Sally.
In addition, next month or Strawberry Leopard brand will be rolling out new colors and sprays.
In the nail category, we recently completed launch a Sally Hansen's Miracle gel and Neal Booze, Joe Polish where we have an exclusive through calendar year and.
Lastly, we're continuing to prioritize textured hair and have a number of new brands hitting the shelves later this month, including Kiss Artsy Badu and uncle Flunkies daughter.
In 231 being spread penetration for Sally segment was 34%.
Up 150 basis points over the prior year we.
We expect us to continue to increase as we advance our goal to exceed 50 per cent of sales over the next four to five years.
Turning now to our third strategic initiatives, capturing deficiencies and optimizing our capabilities.
The benefits from our store optimization efforts continue to track in line with our expectations.
As a reminder, the bulk of the optimization efforts occurred in December of 2022.
And we expect SG&A savings to be approximately $50 million with a 10 million dollar benefit to operating earnings in fiscal 2023.
Additionally, as we disclosed in our last earnings call. We've been testing a new shipment frequency to our stores that we believe will unlock more benefits to our transportation costs as well as better labor productivity, and our stores and distribution centers, while maintaining healthy and stock levels.
I'm pleased to announce that this initiative tests well enough that we've expanded this process to approximately half of our Sally and BSG stores in the U S. As of the end of July .
We're confident that the actions we are taking to fundamentally change Lily operate will enable us to capture efficiencies in the near to medium term effectively fueling our future and setting us up to reap sustained benefits over the long term.
We appreciate the hard work of our teams across the organization and their commitment to serving in the lighting our customers.
Well the macro environment remains dynamic we remain agile and data driven as we navigate the near term while advancing are long term growth agenda or.
Our path is clear and we have a relentless drive to deliver sustainable growth and value to our shareholders.
Now I'll turn the call over to Marla to discuss the financial.
Thank you Denise and good morning, everyone.
Third quarter consolidated net sales declined 3% to $931 million and 352 fewer stores and 20 basis points, a favorable foreign currency impact.
Consolidated comparable sales grew 1%, reflecting three per cent growth that Sally and a 2% decline it B S. G.
This compares to a 4% decline in consolidated comparable sales in the prior year.
For perspective total sales in Q3, a fiscal 2022.
$961 million, which reflects normalized top line performance.
Unpacking the negative fiscal 2022 comparable sales declined a little further.
It's worth noting that we were up against particularly strong performance in Q3, a fiscal 2021.
When sales topped $1 billion driven by the Covid reopening.
Third quarter global e-commerce sales increased 3% on a constant currency basis to $83 million and represented 9% a total net too.
Moving down the piano.
Maintained strong adjusted gross margin, which came in at 59%.
Downton basis points to the prior year.
Increase product margin, it's Sally beauty, driven by pricing leverage and hire one brand penetration was offset by lower margin of BSG Doula channel mix shifts between stores are expanded read this business as well as a shift and some north Texas distribution center costs from SG&A into gross margin.
Third quarters, SG&A expenses totaled $384 million down $7 million to last year.
The year over year decline, primarily reflects the savings from our previously announced distribution center consolidations in store optimization plan lower advertising costs and cost control.
Partially offset by higher labor and accrued bonus expenses.
Looking at Q4, we anticipate that SG&A dollars will be down slightly versus the prior year.
Importantly, we are on track to achieve the previously outlined expense savings under the D C consolidation and store optimization plant totaling approximately $50 million for fiscal 2023.
Pretty cost control and strong gross margin performance enabled us to deliver and adjusted operating margin of 9.6% <unk>.
Adjusted EBITDA margin of 12.8% and adjusted diluted earnings per share of 49 cents.
Looking at segment results.
Beauty comparable sales were up 3% on that sales declined 3%, reflecting 327 fewer stores in operation versus a year ago and.
70 basis points of favorable foreign currency impact.
A constant currency Sally e-commerce sales declined 5% to $32 million.
I presented 6% a segment net sales for the quarter.
While R E Commerce performance was below our expectations industry data shows we are outperforming the rest of the mass beauty market in a record categories of color care and nail.
For the global Sally Beauty segment color was up 3% driven by Greg coverage.
And character decreased one per cent.
It's L U S and Canada color increased by 3% wheelchair was down 6%, including the impact of store closures.
Gross margin at Sally expanded 30 basis points to $58, 8%, reflecting strong product margin driven primarily by pricing leverage and hire one brand penetration.
Segment operating margins expanded by 50 basis points coming in at 16.6%.
Moving to the B S G segment <unk>.
Comparable sales declined 2% on that sales were down three per cent on 25 fewer stores and 40 basis points of unfavorable foreign currency impact.
On a constant currency basis, BSC e-commerce sales increased 8% to $51 million or 13% a segment net sales for the quarter.
The color category was up 1%, while care declined 7% of BSG on a total sales basis.
We let some new product launches from last year.
Gross margin at Phd decreased 40 basis points to 45%, primarily driven by lower margins due to a sales channel mix shift between stores and our expanded Regis partnership as well as shifts into North, Texas distribution center costs from SG&A into gross margin.
Segment operating margins came in at 12.3% versus 13.7% in the prior year.
We are pleased to see Bsg's profitability profile begin to stabilize after making strategic investments in both labor and our North Texas distribution center over the last several quarters.
Moving to the balance sheet and cash flow.
We ended the quarter with $74 million of cash and cash equivalents and $16 million outstanding under our asset base revolving line of credit.
Net debt leverage ratio stood at $2 two times.
As we previously announced during the third quarter, we entered into a three year interest rate swap agreement, which swaps emotional amount of $200 million of our new term loan from a floating term so far right to a fixed rate of 3.705%.
Moving to inventory we ended the quarter at just under a billion dollars, that's down 2% versus a year ago and reflects a healthy overall position, including strong in stock levels.
Third quarter cash flow from operations with $53 million in capital expenditures totaled $22 million.
For the full year, we expect free cash flow generation to be approximately $175 million.
Which includes approximately $35 million in one time cash payments related to our D. C in store optimization efforts.
This provides us with a financial flexibility to invest in our new strategic initiatives to drive long term growth to continue optimizing our capital structure and a return value to shareholders.
Turning now the guidance with our year to date performance, we're bringing up our adjusted operating margin to the higher end of our original guidance and maintaining all other components of our outlook for fiscal 2000 twenty-three as follows.
Comparable sales are expected to increase by low single digits compared to the prior year.
Net sales are expected to decline by low single digits compared to the prior year.
At the end of fiscal 2023 total store store count is expected to be down 6% to 7%.
Compared to the end of fiscal 2022 due to our store optimization plan and a small number of new store openings.
Gross margin is expected to remain above 50%.
And adjusted operating margin is now expected to be in the range of 9% to 9.4%.
This reflects increased investments and sore labor, partially offset by unexpected benefits operating earnings of approximately $10 million related to our D. C consolidation in store optimization plan.
For added perspective, we expect total sales in the fourth quarter to be similar to our third quarter levels.
We appreciate your time this morning, now I'll ask the operator to open the call for Q&A.
Thank you ladies and gentlemen.
Question. Please press one and then zero on your Touchtone phone you will have an acknowledgement that you've been placed in the queue and you may remove yourself from queue at any time, if I repeat in the lines There'll command and if you're on a speaker phone. Please pick up your handset before pressing that number once again if you have a question. Please press one zero at this time.
The first question will come from.
I'm, calling please go ahead.
<unk> for all everything for taking our questions. Just curious on the promotional plans. We are hearing in the industry worker for higher promotion what have you been in terms of <unk>.
<unk> and what is embedded in your guided and also on happy Beauty company that concept.
Just curious how dark customer step might differ problem, suggesting Sally customer and how you think that will be incremental to Sally. Thank you.
Yeah happy to answer both of those questions you know on the promotional activity front, you were seeing a little bit different behavior on our Sally side of our business versus Rbs's side of the business on the Sally side of the business for Arsenal activity is fairly consistent with what we've seen the first two quarters of the year. So that's your moderate ongoing promotional.
Activity, but but nothing particularly outsized I think when we look at the <unk> side of the business. We certainly have stylus that are seeking out deals you know they are working districts their money, they're looking for those deals and so we saw promotional activity to tip.
Increased just a bit on that side of the business I think what's important on both sides of the business and even more so it'd be S. G. As we watched the trends in the industry right along with our vendor partners and our vendor partners have been very supportive and leaning in where we can fund those promotions.
Drive some unit growth in the business, but enable us to maintain our gross margin profile.
While getting those incremental sales so I'm anticipating that that promotional cadence is gonna remain pretty consistent as we move through the next few quarters and will continue to partner with our vendors to make the right choices to serve our customers well on that front.
Unhappy D company front were just so excited about the opportunity we have here to reach a bit of a different customer base in fact, and importantly reach them with different categories and what we have in the baseline of our Sally business. Today, We think the concept really has great potential and when we think about the customer base it's about.
Millennials value seekers of all age discount beauty buyers.
And when we look at the market you know, there's about $30 billion of beauty and personal care that spent from households, making under $60000 a year and that's where we actually believe that happy BD co concept should have the highest appeal to.
Two of our stores are going to be directly targeting in going after that profile that I. Just described but we're also gonna test stores, where they have a very different profile and we're going to get a good sense on how the concept resonates across a bunch of different economic and demographic groups. As we go forward. So we're really in the early innings, there, but when you.
Think about both the ability to serve that value customer, but really expand and focus on cosmetics skin care Bath and body.
With some nails and some hair, we're really stretching into the other side of the category that we don't participate in as much today with the salary brand.
Perfect. Thank you.
Thank you. The next question is from actually have some Jeffries. Please go ahead.
Hi, Thanks for taking our questions anything you can share about the third third party brands are gonna have a happy beauty and then also anytime kind of the real estate location strategy. Thanks.
<unk>.
Yeah sure you know on the third party brand front. It is all work in development right now with the pilots we opened it.
Some well known brands, but also some more entrepreneurial brands that are coming in with some Korean beauty brands. Some Australian beauty brands things that really can bring great product efficacy at the value price point, that's out there. So that that third party brands piece is going to continue to deliver and develop over time.
And as we think about that and look forward and married up with our own happy Vd co brand in the stores as well so a healthy mix it across that both of those that were excited about you. When we think about the real estate strategy. When we just think geographically, we're starting our tests and the Dallas Fort Mark Fort worth area as well as Phoenix and then when.
Think about the centers that we're in we're really going after with this 10 pilot stores a mix of a bunch of different types of centers that target different demographics and different.
Economic profiles to really get a sense of where the concept will most resonate.
That can expand from a heavy Hispanic market that might skew a little bit lower income to a more middle income <unk>.
Closer to college University environment that would be out there.
Literally everything in between and that's where we're really excited about the planning that we've done to pull the pilot together to say.
Three months six months nine months from now will be so much smarter about where it resonates what we would do to tweak the concept and where we would go there but most of these will all be in traditional types of strip mall centers, just the different ones depending upon.
The notion of the demographic that we're going after.
Great Super helpful.
Thank you once again, if you have a question. Please press one and then zero.
Our next question is from Olivia.
Please go ahead.
Alright. Thanks, Good morning, I wanted to ask you about the <unk> load after.
You know promising performance in March quarter, you can talk about some weakness last quarter.
<unk> call in March and April sound like me I got a little bit better. So can we talk a little bit about where you stand relative to the guy.
Some of that of Yuan, perhaps improving profitability as you narrow your margin target to the upper and just kind of a little bit more color in terms of the the components of the of the call. Thank you.
Sure. So we break it up we have those the BSG and Sally businesses, you're performing a little differently this quarter, but if I backed up one step I think when you think about the performance. This quarter. We also have to look at the historical comparison Marlowe mentioned that a bit and are prepared remarks, but the comparison that we were going up against it.
Third quarter of fiscal 2002 was comparing against an incredibly high base in physical 21 coming off of the Covid reopening, where we had a quarter that was over $1 billion in sales. So he posted a modestly negative comp last year coming off that high in Q3 last year was really Ah.
Good normalized baseline to kind of compare the business go forward. So on the Sally business with this quarter. What we saw was continued strength in the recaptured sales from the store optimization that contributed almost all of the three costs that we put out there in the market.
And to your point about the cadence of the quarters, we did see the softness in April and interestingly it looks like many retailers out there experienced similar level and softness in April , but we did see it improve moving into may and or Stabilise as as we continued to move through June So you know.
Glad that we saw that resurgence of activity from where we were in that March April timeframe.
But that April timeframe did factor into the performance in the quarter and then I think the only other important part that I'd mentioned on the Sally side as if we thought about what happened in queue to where we posted in the nine cant remember that that had a different comparison in the prior year, which was really the year. When we still had the COVID-19 outbreak situation in the January February time.
[noise] frame and so some portion of that with simply lapping the prior year. So overall Sally on track with where we thought that it would be as we move through the year and then with B S. G. I think the thing that I'm personally most pleased about as we continue to seek transaction growth and we continue to see strength in color with growth in color.
Upsetting that a bit we did see Silas demand trends remaining consistent with what we've seen the last few quarters, where there is a frugality and really buying what is needed and I think the other part for us that we saw coming into the quarter was that in.
In her care this year in Q3, we launched a lot of new innovation the reality, though while much of that innovation was quite successful it wasn't enough to offset what was a very big innovation quarter last year, which included the launch of all flex number nine so a little moderation on that care side, just as we were in a different.
Innovation cycle last year versus what we were in this year. So all in all of the quarter came in when we think about versus year ago very similar to what we thought cadence for the balance of the year I think performance that we saw on Q3 gives us confidence to deliver on our full year guidance, which was comp sales upload.
Single digits in total sales download single digits.
And the strength of our efficiency programs.
Solid performance of our continued gross margin above 50% is really what it gives us great confidence to go to the upper end of our guide when we think about that operating income I think we're now guiding.
Looking to finish the year strong.
Got it thank you and then there's.
Zeroing in a little bit more on the margin nyquil and narrowing towards the high end could you talk a little bit more about that.
<unk> promotional environment, adding turns interesting weather you know.
Uhm towards the upper end of the market for some for more value oriented consumer products.
Any particular time that you're seeing whether it's in colorado or or or a hair care related categories. And then just lastly, your views on why you think that he come with lagging whether it's just that particular point in time or or something more sick stomach that thank you.
Great a lot to unpack there. So let me start off a little bit just reiterating a bit of the thoughts that we have around the promotional environment. We saw a little bit of an uptick in BSG remained very consistent within Sally, but our margins strength really comes in our partnerships with our vendors and really being able to leverage inverse.
<unk> from from their perspective to maintain our gross margin rate, but be able to see the increases in unit that we get when we do lean into promotion, we don't anticipate promotion going to any outsized levels, but I would expect to that Sally will maintain where we sit today and BSG will maintain the bit of uptick that we saw in this last.
Porter, but before getting to the E. Com question I think it might be helpful. If Marlowe just provides a little bit more.
Color around what else is driving the strength in the operating margin and kind of taking us to the high end of the guys. Yeah. No I think it gives us confidence and hinder the guide is our strength of our gross margins are being able to maintain above that 50%.
Where we are year to date is pretty much what we see for full year on the Sally side, the strength is coming from our increasing one brand penetration.
And we did call out pricing leverage we have been able to overcome vendor cost increases with our pricing actions in recent quarters we.
We don't see further outside vendor cost increases.
Going forward, we believe that moderates, but we will continue to monitor that on the gross or on the <unk> side gross margins have stabilized they do reflect the structural shifts time that we've been talking about with our expanded read this business as well as the the relocation of the North Texas D. C concert are now at the margin.
Had moved up from SG&A so.
So really good performance on our gross margin front and believe we have stability there going forward and when we look at SG&A and we're really pleased to see SG&A dollars down from last year.
And looking at it as we finished the year, we expect that to be the case for Q4 as well getting really good benefits out of really strict cost controls as well as the plan benefits that we're getting out of our D C consolidation and store optimization efforts.
And those things are offsetting some really important investments that we made in wages as well as our continued investments in our strategic initiatives. So with our optimization efforts delivering the $50 million that we expected and SG&A savings this year and the lift on operating earnings of $10 million to this fiscal year.
Building off the strength of the gross margins.
We believe we have we're in a great position to deliver on the the higher end of our operating margin guidance range.
And then I guess coming back to your comment on E Commerce, and what we think about the e-commerce business today at Sally.
I would say is I think we see a bit of a channel shift underway. The industry E. Commerce data that we have shows softness overall in our key categories and that same data suggests that we are outperforming what the what the total can amass beauty market is doing in color Karen nails from an E com perspective, but when we.
See the same idea that we have customers and consumers who are trending back to experiences are trending to travel there are trending to restaurants, you see that a bit and people trending back to an in store shopping behavior as well and we feel like that's what we saw in the quarter more so than anything.
But to be clear our performance is below our expectations in this space and we are working very hard to.
To turn that dial in when the customers ready to be shopping e-commerce, we're going to be ready for them as well.
We're really focused on the offering that we have with the expansion of marketplaces underway. The launch of our license colors on demand coming online later in this month, but we round it out with a really healthy e-commerce business in the spirit of the profitability of R. E. Commerce channel is quite strong which is largely fuelled by.
The fact that our stores actually support the fulfillment of about 50% of sales in this past quarter, which had both be bye bye online pick up in store as well as our two hour delivery from our stores. So right now it feels like it's a little bit more market, but we're not satisfied with our performance and lots more that we can.
Do their to continue to accelerate growth.
Great. Thank you best of luck.
Thank you and at this time there are no further questions in queue. Please.
Please continue.
Wonderful well, we thank you all for your participation today, when we think about being three quarters end of the year and we're on track with our operating plans were on track with our financial expectations that we laid out at the beginning of the year and I would like to close by saying I'm extremely excited about where we're headed we have spent the last 18 months charting our strategy.
<unk> preparing initiatives that we have that we're going to launch into some extent starting to test, but we're really turning the corner. This quarter that we are now fully in pilot stage on many significant projects from our cosmic Croft direct site to studio by Sally license colors on demand and now recently discussed.
Happy beauty co and that really gives us a great opportunity to continue to build those pilots continued to test and learn and we're doing all of this with the path leading towards 2025, plus really being able to see the fruits of these labour start to gain traction and get an expansion. So excited about where the future is taking us.
And as a final a reminder, I would just say thank you again to all of our associates around the World. You are you are the ones that make our customers happy every day and we appreciate all you do and with that we will talk to you again next quarter.
Thank you, ladies and gentlemen that does conclude our conference for today. Thank you for your participation and for using AT&T teleconference. You may now disconnect.
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