Sally Beauty Supply is closing 350 stores. I visited a location and saw why the company is struggling.

Ann Matica/Insider

• Sally Beauty Supply will close 350 stores and two distribution centers starting in December.
• After fourth-quarter losses, the company is rolling out a new optimization play to save an estimated $50 million in expenses in 2023.

Sally Beauty Supply announced on November 11 that it will be closing 350 of its stores and two distribution centers in Oregon and Pennsylvania as part of its new optimization plan.

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After several quarters of piloting store closures, the company said its newest plan is estimated to save approximately $50 million in expenses with about $10 million in adjusted operations earnings for the 2023 fiscal year.

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Source: Sally Beauty Holdings

In its Q4 earnings, Sally Beauty reported $962.5 million in net sales, which is a 2.8% decrease from 2021. The company attributed this decrease to being "unfavorably impacted by inflationary pressures that continued to impact consumer behavior and supply chain challenges."

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Source: Sally Beauty Holdings

The majority of the store locations that are set to close are in the US, and most of them will permanently shutter starting in December.

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I visited a Sally Beauty Supply store in the Hell's Kitchen area of Manhattan to see why the company is curtaining so many of its brick-and-mortar shops.

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As soon as I walked through the store doors, I spotted a clearance section that was set up to the left of the entrance. The majority of the products on sale were makeup or hair-related.

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More than half of the store was dedicated to hair care and styling products and tools. For hair stylists and salon owners, Sally Beauty seemed like a good supply store to go to to find specialty brands and products in bulk at affordable prices.

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The store had a plethora of curlers, clips, and capes for haircuts. There was also a more limited selection of hair extensions and wigs for sale.

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Hair styling spray bottles in different shapes and sizes were all priced under $4.

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Styling tools like hair brushes and combs were affordably priced, with the bulk of them being under $15.

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An aisle in the middle of the store was stocked full of hair dryers, straighteners, and curlers.

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There were also additional styling appliances like clippers for sale.

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A sign that said all electrical appliances were final sale made me wonder if this is one of the locations planned for closure in the near future.

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Another sign said that customers would receive $20 off select styling tools.

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The store had so many different shampoo and conditioner options to choose from.

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Signs offering discounts on hair care products were fixed to displays and shelves. Seeing all the signs made me wonder if the store always had big deals going on or if it was a sign of the company's financial struggles.

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Shoppers could get four ION products for $20 total, which was a great deal seeing as most of the brand's products started around $10.

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The Sally Beauty store also had a sizable lineup of hair dye brands available, with boxes of different shades lining the shelves.

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Along with a wide range of hair products, there was also the largest nail polish assortment that I had ever seen at a beauty store before.

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I also found an extensive collection of stick-on nails and nail care tools like files, clippers, and nail-strengthening serums nearby.

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Further down the aisle was the makeup accessory area. While the selection was limited, it still had all the essentials at drugstore prices, such as packs of $4.19 eyebrow spoolies, $4.39 beauty blenders, and individual makeup brushes between $7.99 and $15.79.

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There was a deal going on for all Ardell products in the store: buy two packs of fake eyelashes or two cosmetic items and get the third 50 percent off.

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I was surprised to see that the makeup section was designated to one small area, which was half taken up by jewelry for nose and eyebrow piercings.

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Customers looking to buy a simple blush or mascara would have better luck at their local CVS or Walgreens due to the very small assortment of brands and products available at Sally Beauty.

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Visiting the store, I saw firsthand why the company is closing some of its locations. The clientele Sally Beauty appeals to is ultimately likely to be too niche to be able to keep all 3,700 of its stores open.

Ann Matica/Insider

Source: Sally Beauty Holdings

Because most of the store is dedicated to hair care, Sally Beauty's offerings can’t compete with other beauty store retailers like Sephora or Ulta, which sell a larger selection of makeup, skincare, and fragrances. It also doesn't match up to many drug stores that have similar prices and more variety overall.

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