Ladies and gentlemen, thank for standing-by. And welcome to the Sally Beauty Holdings Q4 and Full Year Results Conference Call. At this time, all lines are in a listen-only mode. Later, we will conduct a question-and-answer session. Instructions will be given to you at that time. And as a reminder, today's conference call is being recorded. I would now like to turn the conference over to Mr. Jeff Harkins. Please go ahead.

Thank you, Cynthia. Before we begin, I would like to remind you that certain comments including matters such as forecasted financial information, contracts or business and trend information made during this call may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Many of these forward-looking statements can be identified by the use of words such as believe, project, expect, can, may, estimate, should, plan, target, intend, could, will, would, anticipate, potential, confident, optimistic and similar words or phrases. These statements are subject to a number of factors that could cause actual results to differ materially from expectations. Those factors are described in Sally Beauty Holdings filings with the Securities and Exchange Commission, including its most recent Annual Report on Form 10-K. The company does not undertake any obligation to publicly update or revise its forward-looking statements. 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. With me on the call today are Chris Brickman, President and Chief Executive Officer; and Aaron Alt, Senior Vice President, Chief Financial Officer and President of Sally Beauty Supply. Chris will provide a brief overview of our performance for the quarter and give you an update on our transformation plan and we'll then discuss our fourth quarter and full year financial results in more detail in addition to our fiscal year 2019 guidance. Now, I'd like to turn the call over to Chris.

Thank you, Jeff, and good morning, everyone. As our quarterly results demonstrate, we are making solid progress on our transformation plan. Both the business segments had sequential improvement in same store sales. Sally reported flat same store sales for the first time in seven quarters. BSG saw improving trends and positive progress against the supply chain issues that hampered this segment last year. Overall, we experienced a slight decrease in consolidated net sales, flat gross margin and slightly higher selling, general and administrative expenses due primarily to additional operating expenses from our first quarter Canadian acquisition, resulting in a decline in adjusted operating earnings. However, the benefits of the U.S. tax reform and a lower share count helped drive double-digit growth in adjusted diluted earnings per share. We continue to refocus our team on the defensible categories of hair color and hair care and improving the execution of basic retail fundamentals. We are enabling that effort by taking significant steps to optimize our cost base. Our cost optimization efforts, over time, will permit necessary investment in the business and provide us with opportunities to take further profit to the bottom-line. While progress is being made and we are beginning to see results, significant work remains to be done. Nevertheless, I firmly believe our efforts are putting Sally Beauty Holdings on the right track long-term. The fourth quarter saw significant change at Sally Beauty Holdings and I'd like to highlight some of the steps we took in the quarter as well as the beginning of the first quarter. In regards to our differentiated core of hair color and hair care, we continued to mold our assortment through new product launches, new partnerships, and new approaches to categories. First, as we disclosed in September, we launched new sets of color kits or…

Thank you, Chris, and good morning, everyone. I'd like to start by expressing our thanks to our associates at the Sally Beauty, CosmoProf, and Pro-Duo stores. In a quarter in which we were executing significant changes as part of the makeover of our business, they have continued to focus on our customers' needs and deliver a much improved quarter. Well done. I'm pleased to be here to review financial details for the quarter as well as a short summary of the full year results before detailing our fiscal 2019 guidance. We are making measurable progress against our transformation efforts. We have a plan. Our Q4 efforts were executed consistent with that plan. Fourth quarter consolidated revenue was $966 million, a decrease of 0.8% versus the prior year, was a modest revenue contribution from our first quarter acquisition in Quebec, Canada, offset by an unfavorable impact from foreign exchange translation, a 0.2% decline in consolidated same store sales, and reduction in sales for our full-service business. Foreign currency translation had an unfavorable impact of approximately $4.6 million or 50 basis points on reported revenue growth. We did see improvement against supply chain issues that materially impact the Beauty Systems Group segment during the third quarter, but service levels were still not completely back to normal by the end of the fourth quarter. This is reflected in both same store sales and in our overall revenue line. The BSG team has estimated that there was $2 million unfavorable impact to sales attributable to external supply chain issues or the equivalent to approximately 60 basis points of same store sales for BSG during the quarter. Our consolidated gross margin for the quarter was 49.5%, which was flat compared to the prior year. In our largest business, the Sally Beauty segment, an 80 basis…

Thank you. And our first question will come from the line of Mark Altschwager with Baird. Your line is open. Mark R. Altschwager - Robert W. Baird & Co., Inc.: Great. Good morning. Thanks for taking my question. And congrats on the strong finish to the year. I wanted to follow-up on the comp guidance flat for the year. Just – can you give us a sense directionally how you're thinking about Sally Beauty versus BSG?

Again, I think, we would expect, Mark, that both will show improvement, Sally's already established that it can achieve that level but we expect both to show improvement. Sally on the back of a revamped promotional strategy and new products that it's launching. BSG on the back of adding Pravana and then reduced supply chain impact from some of our vendor disruption issues. So we're expecting an improvement in both businesses year-over-year. And so I don't think there's a lot of texture to that. They both will be better. Mark R. Altschwager - Robert W. Baird & Co., Inc.: Okay, thanks. And just one more guidance clarification. I apologize if I missed this. But the gross margin guidance, again flat for the year. Would that also be slightly weighted to the back half? Or how should we be thinking about the shape of the year from that perspective?

We're not going to break it down across the year. You can take some learning from the progression you saw over the course of this year and our cost saving initiatives are well underway. Mark R. Altschwager - Robert W. Baird & Co., Inc.: Okay. Thank you. And just one last one on loyalty, if I may. First, congratulations on the launch. We are getting a lot of questions regarding how this is going to flow through the P&L this year. I know you said break-even for the year. It sounds like you're going to be losing the card revenue then you're getting the benefit of the price increases but some offset from the cost of the free item. So a number of puts and takes there that net out to break-even. So I guess the question is, one, am I thinking about that the correct way? And, two, is there an initial gross profit headwind that needs to be made up later in the year to get to break-even or just any further clarity on the tests and what those have shown would be helpful as we model out the year? Thanks so much.

So couple thoughts. Of course, we have deferred BCC revenue which we will bring into income during Q1 with a small portion continued to be deferred thereafter which is reflecting the liability that we're building a connection with a point system in the new program. So we will see a positive impact earlier in the year offset by a negative impact as we move through the year as we build up that accrual.

But those are relatively small across each quarter. So although it will be a little bit of forward-weighted, it's not a dramatic impact in any one quarter.

Correct. Mark R. Altschwager - Robert W. Baird & Co., Inc.: That's really helpful. Best of luck this year.

Thanks.

Thank you. Our next question comes from the line of Rupesh Parikh with Oppenheimer. Your line is open. Rupesh Parikh - Oppenheimer & Co., Inc.: Good morning, and thanks for taking my questions. So to start off, two colors on the boxed hair color launch, anything that has surprised you so far with the efforts that you've done in store? Is there – and then is there anything that you can share in terms of how you're thinking about the sales build over time?

Thanks, Rupesh. Here's what I tell you. We knew when we were launching this product that we were targeting an existing Sally guest already in our store that was walking out the front door having purchased other products to buy their boxed color somewhere else in part because they were, perhaps, somewhat intimidated by Pro Color for home and not knowing what to do with that. The reports back from our stores have been that our expectations on who the targeted customer would be have proven to be correct where we are converting those same customers, leading to it being an additional basket add. Initial results have been favorable for us. We are pleased with what we're seeing in stores. We're pleased with the customer reaction to the product. We'll continue to optimize that as we carry forward and we have decided based on the initial results to launch two additional tranches of additional colors, 10 in March and 10 later in the year as well. So while very early days admittedly, we're pleased with the results we're seeing.

And two other things I'll add that are I'd call surprising. One is that the ion brand is so far significantly outselling the third-party brand which is quite exciting. And second of all is that that is actually at a higher price point. We launched ion at $9.99 a box, and third-party brand at $8.99 a box, and ion insignificantly outselling even at a higher price point due to perceptions of quality that we learned about during the research. So those are both exciting pieces of news. Rupesh Parikh - Oppenheimer & Co., Inc.: Great. And then on your guidance, so the gross margin guidance sort of flat this year. Can you help us understand the puts and takes in terms of how you're thinking about some of the drivers for this year?

Well, I think it's – a couple of important puts and takes. The first is, as we've been talking about now for a couple of quarters, we are very focused on our cost of product acquisition and working with our vendors both on the owned brand side of the house and on the branded side of the house to make sure that we are optimizing those costs. At the same time, we are very focused on ensuring that we have the right value proposition across the board and that impacts both pricing and our promotional cadence. We want to drive traffic to the stores admittedly, but we also want our customers to understand the value they're receiving as we carry (33:53). So starting first the Sally business and increasingly with the BSG business as well, we're focused on optimizing both the cost of the product acquisition as well as the pricing and promo structure around it. Rupesh Parikh - Oppenheimer & Co., Inc.: Okay. Great. And then I'll quickly slip in one more, on capital allocation, is there any more granularity you can give us in terms of how to think about debt pay-downs versus share buybacks embedded in your current guidance range?

Yes, we are assuming that we will not repurchase shares in fiscal 2019 with the important caveat, as I've called out before, that we're going to invest first in the business where we need to, then we will pay down debt to our guided leverage ratio of 2.5 to the bottom of the range. And only then will we consider repurchasing shares. We'll see how the year materializes. Rupesh Parikh - Oppenheimer & Co., Inc.: Okay, great. Thank you.

You bet.

Thank you. Our next question comes from the line of Oliver Chen with Cowen & Company. Your line is open.

Hey, good morning. This is Ross Collins on for Oliver. Thanks for taking our questions. Just to hear a bit more on the cost efficiencies mentioned, can you just speak a bit more to kind of which of these initiatives are expected to inflect in the back half of 2019, kind of, as embedded in your guidance versus what the longer term opportunity to think about?

Well, we won't get too specific. But just to give you some examples, when we resource, as an example, our owned brands, sometimes that's a direct price change where you stay with the same vendor and they just change their price by winning a bidding process. And in that case, it flows to the P&L pretty quickly. In other cases, you're moving a significant amount of production from one vendor to another, and in other cases, we've actually not only moved the vendor, we've also changed bottle and packaging suppliers and that takes longer to get done. So the point is is that although some of the margin improvements are probably already in the – are already in the P&L, others are going to take six months or as long as a year to flow through. So it's a slow build throughout the year, which is why it takes time. There's a lot of work that goes into getting it done, and that's why we expected to build as we go through the year.

Got it. Thank you. And then just secondly on the BSG supply chain side, I guess could you speak a bit more about kind of what has been addressed versus what remains to be done there? And then any sort of timing parameters to be thinking about moving forward? Thanks so much.

You bet. Happy to do that. Listen, as you saw in the numbers we released, it got much better quarter-over-quarter, and Henkel has significantly improved their execution. There are still some lingering issues with Coty going. Last quarter, those primarily focused on the Nioxin brand and OPI. As we have gone into this quarter, we still see some lingering impact. Nioxin has improved but OPI continues to be an issue. So I guess I would describe it as it continues to get better, but it's not all gone yet.

Got it. Thanks so much.

Thank you. Our next question comes from the line of Simeon Siegel with Nomura/Instinet. Your line is open. Simeon Avram Siegel - Nomura/Instinet: Thanks, guys. Good morning.

Good morning. Simeon Avram Siegel - Nomura/Instinet: Impressive gross margin gains in Sally, congrats there. And just to follow up on that prior one, given that the concepts have a mix element, so what does the flat guidance look like by concept? I think you mentioned there were COGS savings by speeding up payments to vendors, so could you quantify that at all? And then just could you help put in context the raised prices versus, I think, we had spoken about price reductions earlier in the year. So are the price reduction – is that story behind us? Thanks.

Couple thoughts. We aren't providing a breakdown across the segments relative to the progress over the course of the year. We've provided guidance on a consolidated basis. The answer to your question around pricing, in the Sally business, we've converted to the two-tier model from the three-tier model with the expectation that value will still be and will be more apparent to our guests as well. And so, in some cases, that will mean that prices will decline. In some cases, that will mean prices will be more appropriately where they should be given the relationship we have with our customers as we carry forward.

And the only thing I'd add is, in the last quarter and in going forward quarters, some of the benefit we're seeing with Sally gross margins is around a more focused promotional strategy, what we would describe as fewer, deeper, bigger, which is cutting back on the total number of promotions, but then going deeper in some key categories that we believe will drive traffic to the stores. That has proved to be effective both from driving improved sales performance, but also margin. So you're going to see that in Sally and obviously we'll try and extend any learnings we can to BSG as well. Simeon Avram Siegel - Nomura/Instinet: Okay. Thanks. And then just given the constructive commentary around the strategic North America and South Americas, how is Europe doing in terms of profitability versus the Americas?

So I describe that as the Europe business, as you know, we went through a significant integration between our Continental Europe and U.K. business last year. We took a great deal of cost out which increased profitability year-over-year. And now our focus now that we're past most of the restructuring efforts is really on top-line growth. It has been a little slow at this point in time, but our expectation is that we'll really focus in on growth going forward. Simeon Avram Siegel - Nomura/Instinet: Great. Thanks a lot, guys. Best of luck for the year.

Thank you.

Thank you. Our next question comes from the line of Olivia Tong with Bank of America Merrill Lynch. Your line is open.

Hey, good morning. Thank you very much. I was wondering could you give us a little bit more detail on this two-tier pricing system going from three-tiers to two-tiers first. And then if you could talk a little bit about the boxed color and the ion margins versus the Clairol margins? How do they compare? Obviously, the price is a little better, so I would imagine margins are better as well. So, if you can give us a little bit of idea in terms of order of magnitude that would be great. Thank you.

Okay. So, the first question, if you remember correctly in our previous program, which was a pay-for-discount program, we had three tiers. We had the list price, we had the BCC price, which is the price that went to a customer who purchased a card – a discount card, and then we had the Pro price. We have now eliminated the BCC and list that effectively just becomes the normal price on shelf and then there's a Pro price. So, those are the two tiers that exist today. And the only thing that's different is if you sign-up for a loyalty program, then you get rewards that come to you through email or in the mail that then you can come redeem for free product through $5 discount certificates. So, it's now simpler on shelf. There's not three prices on shelf, there's actually really just one major price. And then the Pro price is hidden on the ticket. So, it simplifies the consumer and customer experience and, more importantly, it moves us away from a pay-for-discount program which we believe will allow us to significantly grow the database of customers. And I forgot your second question.

Hi. The second question was around the margins, yes.

There is a significant difference in gross margin between the two products. The range I would tell you would be around 1,500 to 2,000 basis points of margin difference between the third-party brand and the ion brand. And the ion brand is accretive to the overall margins of Sally.

Got it. And then in terms of the SG&A being up as a – up year-over-year in fiscal 2019, what, like – I think fiscal 2018 was a relatively heavy investment year. So, clearly, you laid out quite a few initiatives for 2019, is that the incremental cost? How much of that has already been taken 2018 relative to 2019? And as we go forward, some of the things you talked about for beyond 2019, will there be cost in 2019 associated with those projects whether it be improving your online profile, et cetera? Thank you.

Here's the way to think about it. We did take significant action in 2018 to scoop cost saving initiatives across both margin lines and across virtually every part of the corporation. We did not achieve run rate on some of those savings initiatives during 2018 and over the course of 2019 we will get to run rate on those savings. The incremental savings that we will achieve in 2019 over 2018 is significant. That said, the investment profile that you heard Chris refer to relative to our initiatives across the four key focus for the company, are also significant. And what you should take away is we will have a slight uptick in SG&A as a result of scooping the significant cost savings initiatives, the incremental cost savings in 2019, and offsetting that against the OpEx components of the investments we're making. As we carry forward, we have not provided long-term guidance to you as part of the call, we just guided to 2019. It would, however, be fair to expect that as we carry forward that these cost savings are not going to go away. And so, once we achieve a run rate investment profile at some point in the future, right, that should be a benefit to the corporation.

Got it. Thank you so much. Appreciate it.

Thank you. Our next question comes from the line of Simeon Gutman with Morgan Stanley. Your line is open. Simeon Ari Gutman - Morgan Stanley & Co. LLC: Thanks. Good morning. I think Aaron I heard you talk about priorities with cash. I don't know if you mentioned this and referenced that at the last answer, just thinking about the investment cycle, the length of it. Do you envision the CapEx bump that's happening for next year, does that stay elevated? Can you give us a sense of that? I realize it's early.

Are you asking me beyond 2019? Simeon Ari Gutman - Morgan Stanley & Co. LLC: Exactly.

As I sit here and think about it today, I would observe that while we do – we will need to continue to invest in the company on a more rigorous and smarter basis than perhaps we have over time that 2019 will be a high point from an investment perspective. Simeon Ari Gutman - Morgan Stanley & Co. LLC: Okay, that's helpful. And I guess for both Chris and Aaron, I guess I'm trying to feel out maybe the sensitivity a little bit to the outlook for next year. And so I'll ask it this way, if there's upside potential that leans more heavily to comps or margins for next year, which one would be more likely?

Yeah, that's really hard to think about. I have a hard time answering it, I'd probably guess margin. But I think that's hard to really isolate, Simeon, at this point in time. Simeon Ari Gutman - Morgan Stanley & Co. LLC: Fair.

Yeah, my answer to that, Simeon, would be that we have a lot under way.

Yeah.

Right? We have initiatives which are purposefully designed to help us return the business to growth, but at the same time, we're investing in the cost structure to bring it down to offset our investments in 2019 and to carry forward beyond. And so, I would be cautious about indexing one way or the other. We've tried to be as productive as we can be from giving you guidance on how the package will fit together over the course of 2019. I can't give you much detail beyond that. Simeon Ari Gutman - Morgan Stanley & Co. LLC: Yeah. No, I think that's fair. Maybe if I can paraphrase and you can comment, I mean if it feels visibility on some of the things you can control especially around costs is better. But it sounds like you do feel confident about the top line improving, but that's not something that's as in control as margin?

We would not have provided the guidance we did if we weren't confident that we could hit what we said we were going to do. Simeon Ari Gutman - Morgan Stanley & Co. LLC: Great. Okay. Thanks, guys.

Thank you. Our next question comes from the line of Linda Bolton Weiser with D.A. Davidson. Your line is open. Linda Bolton Weiser - D.A. Davidson & Co.: Yes, hi. I was just wondering further about your comments on bringing the ion electricals into BSG. How does that change your plan to reduce overall shelf space for electricals? And then also, do you see any risks with the idea of putting some of the ion brand into BSG? Up until now, the two product lines and brands of the two retailers were very separate and no overlap. So do you see any risk associated with that? Thanks.

Listen, we will continue to pare back, as we've mentioned, our assortment in electricals. And so, as you can imagine, some of that will be third-party brands that will be pared back and we do think there's opportunity to do that. So I don't think it changes our plans there. And then in terms of risk, we actually think it's good for the ion brand because if consumers see professionals using ion products in their shops or in their salons or suites, we think that continues to build the professional credibility of the ion brand. And given that our vendors sell their products through multiple channels in categories like electricals, we view it as it's very logical that we should be able to protect that category with our owned brands as well in order to protect our margins and have products that aren't available elsewhere. So it's a very category-specific strategy and we want to make that clear. But no, we don't see a great deal of risk and we see it as a way to stabilize the category that's been a headwind for us. Linda Bolton Weiser - D.A. Davidson & Co.: Thank you.

Thank you. Our next question comes from the line of Steph Wissink with Jefferies. Your line is open

Thank you. We just have a few housekeeping questions, if we could. The first is on e-comm, if you could just give us a sense of what percentage of your total sales that is today and how you expect that to grow over the next couple of years? And then just a follow-up to Simeon's question on the CapEx guidance, it's a fairly meaningful step-up year-to-year, but can you give us some sense of where the pockets of the increases are? Are those things that we should expect over the next couple of years will lift the D&A, I think as you have guided just some higher D&A? And then last one if I could just on the pricing increases. Can you give us a sense of the magnitude? Just trying to reconcile the flat comp with a lift in price versus some of the patterns we've seen in the transactions. Thank you.

Sure. There's a lot there. Let me see if I can rattle it off and you can let me know what I missed. The current digital penetration across the enterprise is just north of 3% as we carry forward – sorry, 3% for this year. We expect that to continue to grow. I don't believe we've guided growth rates by segment for purposes of 2019. But as you can tell from Chris's comments around where the investments we're making, a significant part of our investment profile is actually in support of the digital platforms and ensuring that we are able to compete effectively as a omni-channel retailer as we carry forward. I did indicate earlier that this is a high point from our perspective as we sit here today from a capital investment perspective. We are investing really across the house. There is significant capital investment in the POS system that we are rolling out across all of the North American stores. That is a significant investment. Similarly, the replatforming of our digital e-commerce experience as well as the development of the commerce-based apps for the businesses is a significant investment as well. There are store expansions in BSG in Europe and Mexico, which is an investment, so we have a concept store launch that you heard Chris refer to before as well. That's a investment buy us as well. And then, of course, we have the continuing investment in JDA, which is carrying over year-over-year, we're already invested there. But those are some of the buckets of new or incremental investment as we carry forward. Of course, because we are a retailer with a traditional store base, naturally we have run rate, repair and maintenance capital investments that we have to make as well. So those all-in total about $120 million for fiscal 2019.

And on the pricing side, if you think about the shift from the BCC program to a single price, on average, the BCC discount was in that 6% to 7% range. And so, that goes away. But we didn't take it across the board like peanut butter. In some cases, we didn't raise price. In some cases, we just reversed the BCC discount and others we actually raised price a little bit. So the price is between 0% and 10%, and it very much dependent on the competitiveness of the category or the brand, the uniqueness of the product we were selling. So we didn't just treat it like peanut butter. The team did a lot of work using Revionics to look SKU-by-SKU before we did the repricing.

And please don't walk away with the impression that we've raised prices across the house. That's not...

That is absolutely not.

...how this played out. We are optimizing. The value we're providing to our guests in Sally as we carry forward.

That's great, guys. If I could just, Aaron, one on the EPS baseline, so your guidance is that using the $2.16 as the baseline, the adjusted EPS?

Yes.

Okay. Thank you very much.

Thank you. Our next question comes from the line of Bill Reuter with Bank of America. Your line is open.

Good morning.

Hi. Good morning.

You guys gave some good color on the timing of the Oracle POS system and ERP that you're implementing next year. I guess can you talk a little bit about how you have tried to position yourself such that you reduce any risks that, I guess, the rollout could have challenges in terms of, I guess, duplicative functions are running parallel processes, I guess maybe giving us a little bit of color around that would be helpful. Thank you.

The road of history is paved with retailers who haven't paid appropriate attention to the risk in connection with ERP implementations. And we are being very careful in our approach to both the JDA implementation as well as how is that impacting and being impacted by the other initiatives that we have underway. And so, we're taking our time in doing it. We've got an expert team both internally and externally supporting us in doing it. We are going to start the implementation process in a segregated portion of our portfolio so that to the extent that issues arise, it will be on a small piece of one part of our business. We will test and learn there and then we will expand ever so carefully thereafter as we push ahead. As much as I would love to have the implementation behind us rapidly, this is an area where we know we're going to go slow to go fast as we carry forward.

Okay. And then just one follow-up. You just – one of the previous questions talked about the 3% of the business as a whole that's e-commerce. Are you seeing any increased competition from online in the professional channel, meaning, I don't know what the competitive dynamics of that segment look like online and whether there are any, I guess, companies that are trying to make headwinds there?

Yeah. In some cases, yes, but it's isolated. So it's not really in the color part of the business, which is the single biggest part of BSG's business, north of 40% of the business. It does touch categories like electrical appliances, as we've mentioned. And it's a little bit inherent here mainly on those brands, as we've mentioned that are at the latter end of their lifecycle and are pushing more towards retail. And that has always occurred in the professional segment. It's just it's a little easier to push into those retail channels whether that be through Amazon or Ulta or others today than it was 10 years ago, say. So I would say, yes, there is competition there. It's not across the board, and it does focus on specific categories and electricals, and in portions of hair care, more mature brands in hair care would be the areas I would point to.

But it's important to keep – it's always important to keep in mind with respect to the business that one of the competitive advantages that we have with BSG is we have the exclusive brand relationships in key areas. And that makes it much more difficult to compete with us online or otherwise with products that make up the majority of our business.

Sounds good. I'll pass to others. Thank you.

Thank you. We'll go to the line of Carla Casella from JPMorgan. Your line is open.

Hi. Thanks. Can you just give a little more color on store count? I think you've talked about closing 1% to 2% of your stores. Can you talk about either cadence? Or have you set more specific numbers for this year?

The update I would provide you is, on our last call, I guided that we were considering closing 1%, 2% of our gross portfolio. With the benefit of now having baked the plans, I would counsel you that or guide you that the number of stores will decline closer to net 1%. And we will, of course, optimize that across the portfolio and in the context of where we see market opportunities.

Okay, great. And then in terms of the new – you talked about a few interesting new hair care lines and more organic and natural type. When you're seeing the purchasing habits for those type of products, are you seeing switchover from existing lines or is it bringing in new customers?

It's both. Clearly, natural is going to be a big push across both business segments. As we go into next year, we're seeing demand from the consumer for it. And what's great is a lot of those products tend to be smaller indie products. And in many cases, we can get exclusivity, not just in the pro channel, but versus all competitors, complete exclusivity, which is what we got with Maria Nila. So in many ways, actually, we see it as an opportunity for us to push down a path that the consumers are excited about and increase the strength of our exclusive platform.

Okay, great. And then just one last clarification on your same store sales. Have you given a sense of traffic versus ticket and how that's been trending from third quarter into fourth quarter, and/or if you can give anything month by month?

No, we really don't break those two apart. But in general, traffic is down slightly but we're getting better at ticket.

Great. Thank you.

Thank you. And with that, Chris, I'd like to turn it back over to you for any closing comments.

Thank you, everyone, for your questions today. To summarize, we fully recognize the need to reinvest in our business in order to drive future growth. And we have aggressive plans both to upgrade our e-commerce platform, our store technology, our merchandising systems, our loyalty and CRM capabilities, our merchandising and store concepts, and our associated compensation strategy. We expect these investments to be funded largely through our previously announced cost reduction program. Despite retail sector headwinds, we are the established leader in hair color and hair care for the professional and the consumer and these categories of sustained healthy growth while other categories have faced increasing competition. We believe that these strategic investments will accelerate growth in our highly differentiated categories of color and care and keep us on the path to long term earnings growth. Thank you for joining us today.

Thank you. And ladies and gentlemen, that does conclude your conference call for today. Thank you for your patience and for using AT&T Executive TeleConference Service. You may now disconnect.