Good morning, everyone, and welcome to Sally Beauty Holdings Conference Call to discuss the Company's First Quarter Fiscal 2024 Results. All participants have been placed into 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 Jeff Harkins, Vice President of Investor Relations and Treasurer for Sally Beauty Holdings.

Thank you. Good morning everyone, and thank you for joining us. With me on the call today are Denise Paulonis, President and Chief Executive Officer; and Marlo Cormier, Chief Financial Officer. Before we begin, I would like 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 from those indicated by these forward-looking statements as a result of various important factors, including those discussed in the Risk Factors section of our most recent annual report on Form 10-K and other filings with the SEC. Any forward-looking statements made on this call represent our views only as of today, and we undertake no obligation to update them. The company has provided a detailed explanation and reconciliations of its adjusting items and non-GAAP financial measures in its earnings press release and on its website. Now, I'd like to turn the call over to Denise to begin the formal remarks.

Thank you, Jeff, and good morning everyone. We're pleased with our start to fiscal 2024, marked by financial performance that was in line with our forecast. First-quarter net sales of $931 million declined 2.7%, primarily reflecting the lapping of store closures that occurred in December 2022. While comparable sales declined 0.8% in the quarter. Adjusted gross margin was above 50% and in line with our expectations, and adjusted operating margin came in at 7.9%. Additionally, we generated solid operating cash flow of more than $50 million, enabling us to return value to shareholders through $20 million of share repurchases. In our BSG segment Q1 comparable sales were up 1% as we saw a modest strengthening in salon demand trends coupled with strong momentum from recent product launches and our acquisition of Goldwell New York. Comparable transactions increased 3%, while average ticket value declined 2%. In our service segment, customer shopping behavior remains fairly consistent with recent quarters as they continued buying primarily to meet needs. Q1 comparable sales were down 2%, with comparable transactions down 4% and average ticket value down 2%. Our teams continue to execute well against our core strategic initiatives of enhancing our customer-centricity, growing our high-margin owned brands, amplifying innovation, and increasing the efficiency of our operations. To that end, we continue to expect that product innovation, territory expansion, and new services will contribute 200 to 300 basis points to our top-line performance this year. During the first quarter, in line with our expectations, these initiatives contributed over 200 basis points to our comparable sales results, with product innovation being the predominant driver. Let me share a few highlights. Starting with product innovation, we are seeing momentum across both our own and third-party brands. In Q1, own brand sales penetration for the Global Sally Beauty segment was 34%, up 20 basis points over the prior year. Additionally, our bondbar and Ion continue to perform well with notable strengths in bondbar care and Ion color. Of note, Ion remains our largest owned brand in the US and Canada, and bondbar has grown to be our fifth largest owned brand in just over a year's time in the market. We're also seeing strong performance in the textured hair category. We have a pipeline of innovation planned for later this year. Beginning next month, we'll have several product launches happening throughout 2024 across color, care, and appliances, encompassing both our proprietary line and national brands. Turning to innovation at BSG, standout performers include Amika, Wella's Ultimate Repair, Moroccannoil, and Color Wow. During the first quarter, we expanded our distribution territories for both Moroccannoil and Color Wow and we have additional expansion opportunities across our brand portfolio. Additionally, we captured the first full quarter of sales from our Goldwell of New York acquisition. The BSG segment also has a robust pipeline of innovation planned for this year, which will be particularly meaningful for our stylists as we partner with them to profitably grow their businesses. You can expect to see launches in both new and existing brands across blonding, glossing, express coloring, conscious beauty, and textured hair. Our ongoing focus on customer-centricity continues to serve us well. In Q1, we generated 77% of sales from our 16 million Sally U.S. and Canada loyalty members, while our BSG Rewards credit card purchases represented 8% of sales. Our new concepts and services are building momentum, and we are tracking to our plans for full-year fiscal '24. Our licensed colors on demand initiative is helping us extend our reach and continues to gain traction. In Q1, 36% of our customers who engaged in the service were new to Sally, that's up from just north of 30% in Q4. At quarter end, we had 40 licensed colorists on the platform and plan to expand that to approximately 100 this fiscal year as demand for the service grows. We're also gaining traction against our marketplace initiative, which launched with Walmart in Q4 of last year, building on the success we have had with Amazon. In the coming quarters, we plan to add DoorDash and Instacart, which will enable us to leverage in-store fulfillment. Turning now to Happy Beauty Co. At fiscal year-end, we had 10 pilot stores in operation and we were very pleased with Q1 performance, which included the holiday selling season. We expected the stores to be an attractive gift-giving destination and were gratified to see that take shape with consistent increases in traffic, conversion and average transaction value throughout November and December. We are continuing to build awareness of Happy Beauty with grassroots marketing initiatives and remain enthusiastic about the potential to build a sizable store portfolio over the long term. When we look across the business at both our Sally and BSG segments, at our customers and how they're behaving, and at the same time consider the potential of our newer growth strategies, we're confident that we are on the right course to reignite sales. Building on our Q1 results which were in line with our expectations, we're maintaining our full-year fiscal 2024 guidance, which calls for net sales and comparable sales to be approximately flat. This reflects a contribution of 200 to 300 basis points of anticipated growth from our strategic initiatives, which I mentioned earlier, offset by the expectation that macro factors will continue to pressure consumer spending. In the second half of the year, we expect to see sequential improvement in comparable sales as we further advance our strategic initiatives. We are also continuing to prioritize profitability. Our fuel for growth initiative is underway and we remain on track to capture previously announced pre-tax benefits of $20 million in fiscal 2024. I want to highlight this as a comprehensive program that is fundamentally changing the way we operate and supports our long-term growth algorithm for a low double-digit operating margin. To that end, we recently partnered with an external resource and have begun to uncover incremental opportunities around merchandising margin, non-trade expenses, inventory efficiency, supply chain, automation, and outsourcing that will take effect in fiscal years 2025 and 2026. As an outgrowth of this initial assessment, we've identified another tranche of potential pre-tax benefits totaling approximately $50 million in fiscal 2025, with cumulative run rate benefits in fiscal 2026 expected to approach $120 million. We'll have more to share on our roadmap as we continue our analysis in the coming months. We're pleased to have started fiscal 2024 with strong execution and look forward to further advancing our initiatives across customer centricity, innovation, and efficiency throughout the year. We believe these focus areas are important pillars to attract new customers, increase our share of wallet, and strengthen our competitive position. Our teams are highly engaged, and our deep understanding of shopping behavior and purchasing patterns among our retail customers and BSG stylists allows us to effectively navigate the dynamic macro environment. Our strong market positioning and the traction we're seeing in our initiatives underpin our confidence in the long-term growth algorithm we've previously communicated, which calls for low-to-mid single-digit top-line growth and low double-digit operating margin. We greatly appreciate your continued support and remain committed to increasing value for all of our stakeholders. Now I'll turn the call over to Marlo to discuss the financials.

Thank you, Denise, and good morning everyone. We're pleased to begin the year with financial results in line with our expectations and continued progress against our strategic initiatives. First-quarter consolidated net sales of $931 million declined 2.7%, primarily reflecting the unfavorable impact from our December 2022 store closures and a 90 basis-point favorable foreign currency exchange impact. Consolidated comparable sales declined 0.8%. Global e-commerce sales were $91 million and represented 10% of total net sales. Looking at gross profit, we maintained strong adjusted gross margin, which came in at 50.2%, down 60 basis points versus a year-ago. The price inefficiencies drove lower distribution and freight costs in the quarter, which were more than offset by sales mix-shift between Sally Beauty and BSG, as well as unfavorable fixed-cost absorption related to the timing of inventory receipts. First-quarter adjusted SG&A was up $3 million to $393 million, primarily reflecting increased labor costs and rent expense, as well as other costs related to our strategic initiatives, partially offset by savings from our distribution center consolidation and store optimization actions last year. For the full year, we expect SG&A dollars to be up modestly versus fiscal 2023. This primarily reflects increased labor costs as well as investments in upper funnel marketing and other expenses related to our strategic growth initiatives, partially offset by the favorable impact of our fuel for growth initiatives. As a reminder, we expect to realize $20 million of pre-tax benefits to gross margin and SG&A during the second half of fiscal 2024. For perspective, approximately 75% of the benefits will be realized in SG&A. As Denise mentioned, we are expanding the scope of our fuel for growth initiatives. And now expect to capture incremental cost of goods and SG&A savings in fiscal year 2025 of approximately $50 million. We are in the process of uncovering additional opportunities and building the roadmap for fiscal 2026, which should see us approach $120 million in cumulative benefits. We expect to incur pre-tax charges associated with the Fuel for Growth program in the range of $25 million to $30 million in the current fiscal year, including $5 million that was realized in Q1. Turning now to earnings. Adjusted operating margin came in at 7.9%. Adjusted EBITDA margin was 11.5%, and adjusted diluted earnings per share was $0.39. Moving to segment results, Sally Beauty comparable sales declined 2%, while net sales were down 5%, as we lapped our 2022 store closures and our Sally customer remained frugal, buying primarily to need. At constant currency, Sally e-commerce sales were $35 million, representing 7% of segment net sales for the quarter. For the global Sally Beauty segment, color was down 4% and care was flat. At Sally U.S. and Canada, color was down 7% and care was down 5%, including the impact of store closures. We believe the category data reflects macro-driven pressure on consumer spending and will highlight that the market data shows our market share for color and care remained stable over the prior year. Gross margin at Sally was 58.6%, down 30 basis points to last year, driven primarily by an unfavorable sales mix-shift between higher-margin Sally U.S. sales and lower-margin Sally International sales, as well as unfavorable fixed-cost absorption, partially offset by supply chain efficiencies, which drove lower distribution and freight costs. Segment operating margin came in at 14.8%. Moving to the BSG segment, we saw an improvement in salon demand trends, as well as the benefits from expanded distribution and new brand innovation. Comparable sales were up 1%, while net sales were approximately flat on 20 fewer stores. On a constant currency basis, BSG e-commerce sales were $56 million, representing 14% of segment net sales for the quarter. The color category was up 4%, while care declined 1% at BSG on a total sales basis. Adjusted gross margin at BSG declined 40 basis points year-over-year and came in at 39.4%. The decline was driven primarily by unfavorable fixed-cost absorption and shrink expense, partially offset by lower distribution and freight costs from supply chain efficiencies, as well as higher product margins. Segment operating margin was 10.9%. Looking at the balance sheet and cash flow, we ended the first quarter with $121 million of cash and cash equivalents and no outstanding balances under our asset-based revolving line of credit. Our net debt leverage ratio stood at 2.2 times. Quarter-end inventory was just north of $1 billion, in line with our expectations and reflects a healthy overall position, including solid in-stock levels. We anticipate that inventory levels will hold relatively steady in the $1 billion range throughout the year. We generated positive cash flow from operations of $51 million, allowing us to repurchase $20 million of stock under our share repurchase plan. We're pleased with our start to fiscal 2024 and we are maintaining our full-year outlook as follows: We expect net sales and comparable sales to be approximately flat, reflecting 200 to 300 basis points of growth from our strategic initiatives and investments in new services, as well as expanded distribution in the BSG segment, offset by our expectation that consumer spending will continue to be affected by macro headwinds. We expect gross margin to remain above 50%, adjusted operating margin is expected to be at least 9%, operating cash flow is expected to be at least $260 million, and capital expenditures are planned to be approximately $100 million. Our outlook is based on the following assumptions. Comparable sales performance is expected to improve in the second half of the year, reflecting positive drivers in both of our business segments. At BSG, the lapping of hair care headwinds from the last several quarters will lead to easier comparisons in the second half of the year. Additionally, the second half is also expected to benefit from continued momentum in new brand innovation and expanded distribution opportunities. At Sally, we expect incremental improvement on the top line to be driven by the ramp of Walmart marketplace, as well as the addition of Instacart and DoorDash. The expansion of licensed colorists on demand and benefits in Europe from pricing and new brand launches. Lastly, the $20 million of benefits under our fuel for growth initiative are expected to be realized in the second half of the year and essentially boost the full-year operating margin by approximately 50 basis points. Looking at the second quarter, we expect net sales and comps to be flat to down 2%. This includes approximately $10 million of impact from traffic softness in early January, coinciding with persistent bad weather across most of the country. Importantly, during the fourth week of January, we saw this pressure moderate and trends returned to a normalized cadence. As a reminder, Q2 is usually our lowest quarter from a total sales dollar perspective. We expect to see sequential improvement in the gross margin rate in Q2, driven in large part by diminishing impacts from unfavorable fixed-cost absorption related to the projected timing of inventory purchases. Additionally, we anticipate that adjusted operating margin will be approximately 8%. Lastly, it is reasonable to expect investments in share repurchases in the second quarter that are similar to our last quarter. We appreciate your time this morning. Now, I'll ask the operator to open the call for Q&A.

Thank you. Our first question is from Korinne Wolfmeyer from Piper Sandler. Please go ahead.

Good morning, team. Thank you for addressing my questions. First, I would like to understand how much of the growth this quarter was attributable to our owned brands compared to national brands. Additionally, could you break down the contributions from price, volume, and mix? Finally, how should we consider these factors moving forward? Thank you.

Good morning, Korinne. Let me start there. So in total, the comp performance that we delivered had about 200 basis points of goodness from our strategic initiatives overall. Within that, innovation was the largest driver. To your question, there was contribution from both growth in our own brands and growth in our national brands. The national brands growth was pronounced on the BSG side, where, of course, the own brands growth would be pronounced within Sally. But both represented a healthy portion of the business as we looked to contribute to that comp base. And then when you look at the mix of how that all came together, we really saw two different stories on the BSG side and the Sally side. On the BSG side, transactions were up. We had strong customer counts, particularly as we came to the end of the quarter as stylists saw a modest uptick in demand. So that was really through incremental transactions, and while the ticket was slightly down, it was great news that we saw customer traffic coming into the store. And while we're watching that closely, we hope that it will persist, and we will see that demand trend continue. On the Sally side of the house, transactions were down, while ticket was up a bit. That continues to reflect consumers spending a bit closer to need, buying into their core categories. But we were pleased to see overall that we continue to see strengths in color, and we continue to see strengths in texture, and we believe that we're holding share in the space that we're in. We're really facing a bit of consumer pressure on purchasing behavior.

Very helpful. Thank you. And then just on the gross margin line, can you kind of walk through the puts and takes a little bit more? You gave a little bit of color in the prepared remarks, but want to better understand how much of the contraction was driven by shrink versus fixed cost absorption versus any other pressures you may be seeing. And then how much benefit were you getting from the higher product margin? Thank you.

Yes, thank you. So on the gross margin line, we're still really pleased, delivering above the 50% mark and strong gross margins there. We did see about 60 basis points of pressure in Q1. There were a handful of puts and takes. So on the positive side, as we continue to focus on driving supply chain efficiencies, we continue to see benefits there. We've got lower distribution and freight costs. As offsets, there were a few. We had a greater percentage of lower margin BSG sales in the quarter. We did incur some unfavorable fixed cost absorption; that's really due to timing. That ebbs and flows throughout the year. We expect to see that come back and diminish as we get into Q2. Lastly, we did experience some shrink. I would say that's the most minor part. It was a minor headwind and that was really in our BSG business.

Very helpful. Thank you.

Thank you. Our next question is from Oliver Chen from TD Cowen. Please go ahead.

Hi, good morning. I'm just curious if you could talk about how traffic trended throughout the quarter and then we're also curious if you're seeing any new emerging trends. Bonding has been so popular for the last couple of years. If there's anything else in hair care that is emerging on the trend level. Thanks.

Traffic was relatively stable throughout the quarter. If we had to pick anything, we saw a little bit of softness in October and a little bit of softness in November, but a little bit stronger December, with December really supported by the BSG side of the business. But we didn't see any big changes month-over-month as we went through the quarter overall. And then in terms of trends, the trends remain very consistent with what we've seen. On the hair care front, it really is about bonding and about products that improve the look and feel of your hair and the health of your hair overall. We see a little bit more interest in scalp care that goes right along with that type of trend. On the color front, when we consider it, the things that are gaining traction are glossing and express treatments because that is what stylists can use to turn their chairs a bit more often. So there are no major shifts in trends, but good healthy continued business across the board there.

Thanks so much.

Thank you. The next question is from Simeon Gutman from Morgan Stanley. Please go ahead.

Hey, good morning, everyone. Hi, Denise. Hi, Marlo. My first question on consumer spending: the consumer being a little softer. There was a time a while ago where this business, at least the Sally side, benefited from trade down, while the consumer was under pressure. Can you talk about, are you seeing that? Because it doesn't seem to be the case on a sequential basis, but do you see customers from different cohorts or people opting not to get service that are coming in and doing it themselves?

Yes. Good morning, Simeon. Overall, I think what we'd say is we have a very stable business and we have a business that's pretty resistant to some of the consumer demand trends that ebb and flow just because we can offset BSG and the Sally business to some extent. So when we see comps on our SBI side down 2%, we think that's a pretty good performance in a challenged macro environment. When we look within that, what we're seeing for customers is we see the particular trade down or increased frugality. No surprise in the lower income segment, particularly below the $50,000 mark, where those consumers are feeling outsized pressure. The build-up of inflation over time is affecting their spending behavior. We're also seeing a higher mix to credit cards and buy now, pay later for what they are buying, indicating that stress. But they are still coming in, they are still shopping; they are just very frugal about buying to need. Buying to need means, I buy color because I do touch up my roots and I want to keep doing that. What I'm probably not going to do is buy that styling tool or that extra hairbrush, the items that would be seen more as splurges at this time. So we see a little bit of trade down and around, but with the value point that we have with many of our own brands and our national brands in our stores, we're reasonably priced to begin with in that mix of what's coming in. I'd say the behavior is pretty consistent with what we've seen. If anything, we just see a little more stress in the way people are purchasing with that mix towards credit card and buy now, pay later.

Okay. A follow-up on BSG. The press release listed first expanded distribution as a factor for improvement. At the end, it was improving salon demand trends. So can you talk about those two? Goldwell, what you bought, does that enter into the comp base or stay out of it for a while? And then just related to it, the weather impact, did that affect BSG and Sally proportionally in January, or was it more Sally?

Overall, when we think about what drove the BSG business, there were three key factors overall. So innovation, expanded distribution, and improving salon demand trends. I'd say, in that order. With innovation very broadly, Amika, Wella's Ultimate Repair, Color Wow, Moroccannoil are places where we saw our customers lean into that mix. And in particular, when we have expanded distribution in a few of those brands with Color Wow and Moroccannoil, that certainly helped. The Goldwell portion of the business: part of that acquisition goes into comps, and part does not. So the new stores that came with the acquisition do not go into comps, but the full service and the rest of the business does. We're pleased to see that performing in line with expectations, and finally, the improving salon demand trend reflects just how stylists were busier and we actively saw that traffic come in. What we really observed was an uptick in demand indicating that we are indeed performing well. And yes, the softness we saw in the early part of January tied to weather did affect both businesses, predominantly Sally, but met 60% Sally, 40% BSG, if we looked at it that way.

Thank you. And the next question is from Olivia Tong from Raymond James. Please go ahead.

Great. Thank you. You mentioned improving salon demand trends at BSG. Could you just expand on what's driving that? You did leave the full-year comp outlook unchanged. But given that BSG was a bit better than expected, could you just talk about how that influences your full-year expectations to start? Thank you.

Yes. When we talked about seeing improving salon demand trends, we referred to it as modest improvement in demand trends. We understand that by observing the purchasing behavior of our stylists as they interact with us. Before the holiday season, they noted a bit more normalcy in clients wanting to come in for a refresh, which was encouraging for us. But it's a new trend line, therefore we are cautious about expecting prolonged growth. Overall, we performed in line with our expectations in the first quarter, despite being impacted by adverse weather conditions at the start of January, leading us to adjust our guidance accordingly. We believe in our prospect for the second half, benefiting from continued innovation and expanded distribution.

Thanks. That's very helpful. So if I could just summarize, it sounds like Q1 was more or less in line, maybe a touch better. Q2 obviously impacted by the weather but you don't expect that to get back in the second half. More or less no change in expectation relative to your expectations going into December quarter?

Fair enough.

Got it. Okay. Thank you. And then just my next question is around the fuel for growth program. You talked a little bit about incremental savings. Can you just talk about where that savings is coming from? Any new buckets or just as you continue that program, you're just seeing a little bit better success rate with achieving savings in the existing buckets?

Yes, thank you. So as we called out last quarter, we were really in our early stages of our fuel for growth work. We had identified $20 million of benefits that we expect to flow through 2024. Most of that is back-half loaded. We also discussed that 75% is SG&A, and 25% is cost of goods. We talked about our partnership with an external adviser. We have completed that assessment, and now we believe we're on a path to identify another $50 million that we can transition into fiscal 2025, leading toward a total of $120 million run rate by fiscal 2026. Early-stage savings are stemming primarily from improved supply chain decisions, including biweekly shipping frequency, where we're currently approaching 80% of the fleet. As we move forward, we are discovering opportunities for savings within vendor negotiations, automation, and merchandising. We see a range of programs that will bring benefits in gross margins, which we think will provide equal balances between SG&A and cost of goods. We're excited about the program and feel that we're getting off to a strong start.

Great. Thank you. Best of luck.

Our next question is from Oliver Chen from TD Cowen. Please go ahead.

Hi. Thank you very much. We were curious about the promotional environment that you're seeing in terms of the landscape and how that's interplaying with how you're thinking about pricing? Also, as we look forward, do you expect volatility in traffic? Just curious about underlying trends there. And then finally, as we model inventory, I would love views on how you're planning inventory relative to sales. Thank you very much.

Good morning, Oliver. So I'll start with the point on the promotional landscape. It remains pretty consistent with how we described it last quarter. Value remains important for both our Sally customers and our BSG stylists. We actually see a little bit higher promotional activity in play, consistent with what we saw last quarter, compared to last year. A lot of that is that we do see a bit of unit demand pull-through when that promotional activity happens. So we have factored that into our model, but nothing is particularly outsized in terms of trend. We are moderating promotional activity to ensure we engage with consumers appropriately. Customers remain frugal overall with their dollars. Whether or not we have promotions, we don't see much change in traffic coming into the stores. We are being careful to drive value for us overall. On a positive note, we are seeing fewer price increases from our vendors as commodity costs and other factors have moderated. We do not expect significant price increases to our average unit retail in the near term given the macroeconomic environment. So, we are continuing our conservative stance on pricing. In terms of traffic volatility, we have seen moderate fluctuations, particularly since inflation began impacting consumers around six quarters ago. Customers base their purchasing decisions on necessity rather than impulsivity, leading to a steady yet cautious cadence in shopping patterns.

Regarding inventory, we expect it to run in the $1 billion range. As you look at the quarterly cadence, it will be fairly level loaded with a slight increase as we progress into the year and then drop back down to the $1 billion range. One aspect to keep in mind is that we are using a weighted average cost method, meaning there will be a lag effect as vendor price increases filter through the system. Overall, we maintain improved levels of unit inventory, with units down significantly while costs from vendor increases are leading to balanced inventory levels. We are hitting our unit weeks of supply targets, and our in-stock levels remain healthy.

Thank you very much. One follow-up. One of your competitive advantages is your own brand portfolio. What are highlights of opportunities you see there for innovation and change? Thanks a lot.

Spot on. We're very excited about the own-brand portfolio. Recently, the most significant change has been the launch of bondbar and the extension of bondbar from care into color. We're observing positive customer responses, bringing in new customers as this brand develops. Future innovations will follow trends aligning with the younger consumer's desire for more natural, eco-friendly products. We plan to explore areas of mindful shopping while advancing our care product line. Additionally, we will continue to roll out items like Ion into hair sunscreen and other solutions that meet evolving customer needs. Our focus will remain on aligning innovation with our consumers' demands.

Thank you. The last question in the queue is from Linda Bolton-Weiser from DA Davidson. Please go ahead.

Yes, hi. Thank you. I was just curious about you've been talking about your experimentation in pilot studies with these other store concepts. And I was wondering if you could quantify the costs related to those pilot tests in this fiscal year. And then sorry if I missed it, but did you give any more color about your plans to expand the value concept, like in FY '25, do you think you will open more of those stores? Thank you.

I appreciate the question. When I consider the concept initiatives that we are piloting right now, I'd really focus on two key areas. One is the Studio by Sally concept, and the other is our value initiative with Happy Beauty Co. Regarding your question about the fiscal impact this year: it's pretty modest financial impact for what we've stood up this year, both in remodel or relocation costs of opening the studio stores and operating the 10 Happy Beauty stores we initiated last year. With 10 stores, we've seen effective grassroots marketing leading to increased awareness, especially during the holiday season. We're seeing solid performance reflected in ticket and units per transaction, so we continue those learnings as we think about potential additional openings; we remain optimistic about building a substantial store portfolio in the long term. For both studios, we hope to continue testing concepts to evaluate efficiency and customer experience. We're seeing positive reactions from these pilot store experiences and gathering a lot of insights to inform future remodeling or relocations across the Sally fleet. The studio concept is a testing ground for understanding consumer behavior and how we can better serve our customers. So while new openings will be incremental, we aim to determine viability for future expansion.

Thank you. And there are no further questions. Thank you.

Thank you all for joining us today. Thank you to all of our associates around the world. We appreciate what you do every day to serve our customers and to all of our investors, and thank you for dialing in this morning and hearing more of our story. We look forward to keeping you posted in the coming quarters.

Thank you, and ladies and gentlemen, that does conclude our conference for today. Thank you for your participation and for using an AT&T teleconference. You may now disconnect.