Sally Magnificence embraces vibrant hair shade in TikTok-inspired advertisements

TikTok inventor and musician Hannah Chelan inspired Sally Beauty’s new marketing campaign. She shared a song about colored hair that went viral on the social media platform.

Sally Beauty Holdings

When Sally Beauty employees saw a viral video on TikTok this spring, they realized they had found the right inspiration to advance their business strategy.

In the video, Heather Chelan sang a catchy tune celebrating her dyed hair. His refrain has been adopted by many: “Having hair color doesn’t make you unprofessional.”

It has become the beauty retailer’s new anthem as it launches a marketing campaign and puts hair color – especially vibrant colors – in the foreground. During the pandemic, Sally Beauty contacted Generation Z consumers on TikTok and YouTube. It has seen a surge in sales of bright colors and textured hair products. The company is betting that people’s desire for authenticity will survive the health crisis even as they return to social events and office cubicles.

“It really comes down to self-expression,” said CEO Chris Brickman. “The office is changing. Life is changing. Work is changing. … It happened before and the pandemic kicked him in the buttocks.”

Strong colors are now also part of his look. His white hair is now dyed with jade and shamrock in the front. “It gives the boardroom a new dynamic,” he said.

Chris Brickman, Sally Beauty CEO, has a variety of vibrant colors in his hair, including purples, greens, and blues. He’s one of the people featured in the company’s new ad.

Sally Beauty Holdings

A video spot that debuted on Friday features Chelan and her jingle. That includes the multicolored curls of other people that Sally Beauty spotted on social media – including Glecy Barquirin, a pediatric nurse, and 92-year-old Helen van Winkle, whose white hair is a shade of lavender – and the company’s CEO.

Chelan said her lyrics were inspired by her own purple hair and how she was turned down by some restaurant server jobs because of it. Her experiments began with a plum-colored afro at the age of 18.

“When I did that, I thought, ‘I can never go back,'” she recalls.

At a launch event for the marketing campaign, Joey Jay, a drag queen and candidate for VH1’s “RuPaul’s Drag Race,” strutted through a New York bar like it was a catwalk. Jay wore bright yellow hair and said the pandemic – and the growth of remote working – is making old corporate dress codes seem stuffy.

“Those staff handbooks, I think we’re going to start throwing them away,” he said.

Sally Beauty started her new marketing campaign with a launch party in New York City. It featured Joey Jay, a drag queen and contestant on the TV show “RuPaul’s Drag Race”.

Melissa Repko

Retail challenges

Sally Beauty has long been known for selling hair colors, styling tools, and other beauty products. It has two sides to the business: Sally Beauty Supply, a chain of stores that attracts clients and independent stylists, and the Beauty Systems Group, which caters to salon professionals. The core business is professional hair color, along with associated accessories such as capes, clippers, and conditioners. In total, the Denton, Texas-based company has more than 5,000 stores in 12 countries.

But in recent years the company has faced challenges that many brick and mortar retailers are familiar with: falling traffic and difficulty adapting to online shopping, said Linda Bolton Weiser, senior research analyst, the health and beauty companies for DA. pursues Davidson.

Sales growth in the same store, a key metric that retailers use to compare stores that have been open for 14 months or more, has gone up and down instead of showing a steady upward momentum – and that scared some investors.

Sally Beauty stock hit an all-time high of $ 35.27 in 2015, but has trended largely down over the past five years, hitting a low of $ 8.28 in October. But since January, stocks are up nearly 64% at Thursday’s close to $ 21.37, for a market cap of $ 2.41 billion.

Weiser said she wanted the company to perform consistently. It rated it neutral but doubled its price target from $ 13 to $ 26 according to its fiscal second quarter earnings report.

The retailer showed strength in the second quarter. Revenue in the same stores rose 6.5% year over year as shoppers issued stimulus checks, salons increased capacity, and stylists replenished products for returning customers.

“Pandemic, which pandemic?”

Hair was one of the few bright spots in the beauty industry during the pandemic. When sales of lipsticks and other makeup collapsed, buyers poured money into self-care items like hair masks and accessories for coloring hair at home.

According to The NPD Group, hair product sales increased 7% year over year in 2020. That’s a big difference from the rest of the beauty industry, where sales fell 19% over that period. The research firm tracks sales at well-known beauty retailers such as department stores and specialty stores such as Sephora and Ulta Beauty. Does not include bulk retailers or specialty stores targeting professionals like Sally Beauty.

Hair care product sales have remained strong this year – a 48% increase in the first quarter year over year and 70% over the first quarter of 2019 before the pandemic. They continued to outperform sales across the prestige beauty industry, which increased 11% year over year in the first quarter but declined 5% compared to Q1 2019.

“Hair burns,” said Larissa Jensen, beauty industry consultant for the NPD. “Hair is the only category [of beauty] it was like ‘pandemic, which pandemic?’ “

However, for most beauty gamers, she said that hair is just a tiny category. It accounts for about 7% of total prestige beauty sales.

In the quarters to come, Sally Beauty will face simple comparisons as it lapsed quarters when the hair industry was largely shut down. However, the company has to prove it can fend off competitive threats, from online retailers like Amazon and newer competitors like Madison Reed to mass retailers like CVS Health, Walgreens, Target and Walmart.

Many of them expanded their range of multicultural hair products over the past year after George murdered Floyd and promised to better reflect the diversity of customers on the shelves. In the past, textured and natural hair products were abundant in specialty beauty stores like Sally.

Sally Beauty has emerged as one of the drivers of sales to vibrant color as younger consumers express themselves.

Sally Beauty Holdings

Closed salons, new opportunity

When the pandemic hit in Spring 2020, some of Sally’s top sales drivers – shops and salons – were temporarily closed.

Brickman said his company relied on growth opportunities created or intensified by the pandemic. For example, he said, e-commerce picked up as more shoppers got used to roadside pickups. When large salons struggled during the pandemic, a growing number of stylists turned to running independent business in rented lounge chairs or from their home – and turned to Sally for supplies. And self-expression has resulted in sales as people banded together or worked from home to try a hair color – from a strand of blue to a full head of pink hair.

According to Brickman, Sally Beauty’s vivid color sales have increased about 20% over the past five years. That growth accelerated during the pandemic, with vivid color sales at Sally US and Canada increasing 53% year over year in the second quarter. They made up 15% of the company’s total paint sales three years ago and now make up about 30%, the CEO said.

Sales in the textured hair category also rose as some black customers chose to wear their hair naturally rather than straightening it. Brickman attributed the trend in part to more frank conversations about races sparked by Floyd’s murder. He also sees a desire to break convention and discard old rules.

“There’s a massive cultural wave out there that is bigger than the pandemic,” he said, citing amateur investors betting on “meme stocks” and discussing strategy on Reddit as another manifestation of that trend.

The company’s e-commerce sales increased 56% in the second quarter. Brickman said he anticipates online sales will account for 15 to 20% of Sally’s business over the next few years, up from around 10% now.

Sally Beauty made other changes as well. It has chosen Marlo Cormier, a former Fossil Group manager, as its new Chief Financial Officer. It has rolled out a loyalty program for salon professionals, unveiling plans for same-day delivery to the customer’s door in just three hours.

Steph Wissink, managing director at Jefferies, said the company laid the foundation for growth, even when hit by the pandemic, by connecting with social media influencers, building relationships with stylists, and picking up on hair color trends.

“They could have just crouched down and poked their heads in the turtle shell and instead they said, ‘No. We know where we have a key advantage and we will only work hard to expand it. ‘ “

In contrast to other beauty categories, Wissink said, Sally will lose some sales because hair is not a “catch-up category”. Customers don’t have to dye their hair multiple times to make up for lost time like refreshing vanity cases. And she wonders if customers will keep their hair colors vibrant when they return to the corporate world.

“Is she going back to the law office with pink hair?” She said. “Or was that just a fun trend at home because she wasn’t seeing clients and wasn’t in court?”

Wissink has a hold rating on the stock but recently raised its price target from $ 15 to $ 25.

Sally Beauty features people with vibrant hair color in a new ad, including Brian Terada, an LGBTQ + advocate.

Sally Beauty Holdings

Sally hopes new customers will stay in, and the marketing is a plea for wider adoption of a range of hair colors.

Brian Terada, founder of Be Free, a nonprofit that supports the LGBTQ + community, is one of those new customers. Last August, the 30-year-old, who lives in Los Angeles, visited a Sally beauty store for the first time. He decided to dye his hair pink – and that resulted in even more colors.

“I went purple, pink, blue, red,” he said.

Terada posted photos on social media showing his different looks. Sally Beauty discovered his profile and decided to feature him in the new ad.

Terada resonated with the company’s message of being authentic. He said the pandemic turned everything upside down, emphasizing how life can change quickly, and freeing people from worrying so much about what others are thinking.

“So many rules and regulations and the way things always were have been broken down by Covid,” he said. “Society is so fragile. One of the rules was ‘pass’. But when the rules are gone, fitting is gone too. “

– CNBC’s Christopher Hayes contributed to this report.