Dive Brief:
- Sally Beauty on Wednesday announced that Denise Paulonis will be CEO effective Oct. 1, according to a company press release.
- Current CEO Chris Brickman will step down from that role and as a member of the board on Sept. 30. He will then serve as a consultant through March 31, 2022, to help support the succession transition.
- Paulonis has served on the company's board since 2018. She most recently was the Chief Financial Officer of Sprouts Farmers Market and is leaving that position after a little over 18 months with the company. Paulonis also worked at The Michaels Companies in a variety of roles, including CFO. Prior to that, she worked at senior-level positions with McKinsey & Company, PepsiCo and Bank of America.
Dive Insight:
After seven years as CEO, Brickman is stepping down as Paulonis moves from a board member role to become the top executive.
"This leadership transition is the result of the Board of Directors' and Mr. Brickman's deliberate and collaborative approach to succession planning," the company said in its press release announcing the change.
During his time with the company, Brickman updated the company's loyalty program, invested in technology, and bolstered the beauty supplier's digital capabilities, according to Robert McMaster, chair of the company's board of directors. "As the Company emerges from the hard work of its transformation, both the Board and Chris agree that now is the right time for a change in leadership," McMaster said in a statement.
The succession is orderly and planned, according to a Cowen analyst note led by Oliver Chen. "We believe Denise Paulonis will be supported by an upgraded and solid talent, and is known as a strong strategic thinker and an experienced public company CFO," the analysts wrote. "Our take is that both in-store innovation and a more connected digital + physical experience are very important priorities."
Over the past few years, Sally Beauty has been focused on that digital transformation. At the start of 2020, the retailer announced a new vice president of e-commerce and vice president of digital product to aid with its revamp. The retailer also updated its mobile app and launched a social influencer program as a part of a major rebrand. It also expanded its AI try-on technology to retail stores and its app.
Those tactics may be important as the retailer engages in building out its younger consumer base. "Ms. Paulonis will face an important task of retaining and engaging many new attractive Gen Z and millennial customers which embrace the do-it-yourself hair culture and color innovation," Cowen analysts wrote in an emailed statement.
The retailer has seen financial progress due in part to these efforts. During the third quarter, the company reported net sales of over $1 billion, up 45% year over year, and up 5% from the same period in 2019. In the third quarter, global e-commerce sales were $71 million, or 7% of net sales. The retailer also reported net earnings of $76.2 million, up from a $23.5 million loss in the same quarter last year.
