Analyzing Business Performance through Analytics Techniques

APPLYING ANALYTIC TECHNIQUES TO BUSINESS Applying Analytic Techniques to Business Katie Butler Capella University Applied Business Analytics: MBA-FPX5008 Dr. Isabel Wan November 11, 2023 1

APPLYING ANALYTIC TECHNIQUES TO BUSINESS Business Context Sally Beauty is a global distributor and retailer offering professional quality products to both retail consumers and salon professionals. (Sally Beauty, 2022) Sally Beauty began as a single store in New Orleans, Louisiana, in 1964 by C. Ray Farber. The store was named after Farber’s daughter, Sally. Today, Sally Beauty is headquartered in Denton, Texas, and has over 4,800 locations across the United States, Puerto Rico, Canada, and some in Europe. The current Chief Executive Officer is Denise Paulonis. Sally Beauty’s purposes and values are dear to every associate’s heart. The company's purpose is the impact it intends to have in the world. The values are how the company lives up to its purpose. The values include the following: be yourself, be an inspiration, be bold, be an owner, and be part of something bigger. Sally Beauty has created a mission to create a culture that welcomes everyone by creating their diversity, inclusion, and belonging mission. The culture for that is called “One & All”. A SWOT analysis was done in Sally Beauty’s competitive analysis. Sally has many strengths that can give it a competitive edge. Among many is that Sally Beauty offers private label products. Many of the brands within the Sally stores are Sally-owned and manufactured, meaning they cannot be found nor purchased anywhere else. This is a great way to keep customer loyalty because it creates a one-stop shop for beauty needs. A weakness stems from one of the company’s strengths. While Sally Beauty has down many of the brands they offer, they also manufacture them. Unfortunately, this can often cause supply issues. A shortage of an ingredient will cause a product shortage, causing many stores and warehouses to be out of stock. No other manufacturer makes those products so that the stores could be out of it for a while. 2

APPLYING ANALYTIC TECHNIQUES TO BUSINESS Sally Beauty has one great opportunity that helps keep that competitive edge. They offer an Associate Influencer program. This allows associates to post reviews on different social networks to spread the word about the product, and the associate can get paid for it. This is a great way to get product reviews out to the masses. Increasing labor costs can also affect Sally Beauty as a threat. The company employs more than 29,000 associates. The company has had to figure out ways to keep turnover low and associates happy while working at Sally Beauty. At the beginning of Fiscal Year 2023, Sally Beauty increased the starting pay for all associates by $3. This helped associates from looking for other places of employment, keeping associates employed longer, which is a better investment than constantly having to train new associates, potentially causing missed sales. The following data looks at Sally Beauty’s stock from November 1, 2022 to October 31, 2023. I will analyze the adjusted closing daily stock price and volume to determine how well Sally Beauty has performed. I will also calculate the mean, median, mode, and standard deviation for the adjusted closing daily stock price and volume. Graphical Representations of Data Interpreting the Scatterplots 3

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APPLYING ANALYTIC TECHNIQUES TO BUSINESS 8/27/2022 12/5/2022 3/15/2023 6/23/2023 10/1/2023 1/9/2024 0 2 4 6 8 10 12 14 16 18 20 High Stock Price Each Day High Date D/M/Y Stock Price in USD Figure 1.1. Scatterplot of highest stock prices of Sally Beauty based on data from Yahoo Finance (2023) Figure 1.1 shows the trend of the highest stock prices of Sally Beauty from November 1, 2022 to October 31, 2023. This scatterplot shows the relationship between two variables: the dates in Day/Month/Year format on the x-axis, which is the independent variable, and the highest stock prices in U.S. Dollars on the y-axis which is the dependent variable. The highest stock prices show a steady increase towards the beginning of 2023, where it started slowly decreasing. There is a significant decrease from the beginning of the scatterplot, starting at $13.05 to ending at under $9 at $8.54. Unfortunately, due to this decrease, it does confirm how stable the market shares may or may not be. 8/27/2022 12/5/2022 3/15/2023 6/23/2023 10/1/2023 1/9/2024 0 5 10 15 20 Low Low Date D/M/Y Stock Price in USD 4

APPLYING ANALYTIC TECHNIQUES TO BUSINESS Figure 1.2. Scatterplot of lowest stock prices of Sally Beauty based on data from Yahoo Finance (2023) Figure 1.2 shows the trend of the lowest stock prices for Sally Beauty from November 1, 2022 to October 31, 2023. The scatterplot shows the relationship between the dates, in a Day/Month/Year format, in the x-axis as the independent variable, and the dependent variable on the y-axis which is the lowest stock price in U.S. Dollars. This graph is similar looking to the scatterplot for the highest stock prices for the same timeframe. The lowest stock prices values increased steadily from October to around February, with small dips in December and January. After February, the values for the lowest stock prices were steadily decreasing, creating a slope with a major dip in May. Again, the decrease helps confirm whether the market shares are stable or not. Interpreting the Histograms 5 10 15 20 More 0 20 40 60 80 100 120 140 160 180 Adjusted Closing Daily Stock Frequency Adjusted Closing Daily Stock Price Frequency Figure 2.1. Histogram of adjusted closing stock prices of Sally Beauty based on data from Yahoo Finance (2023) 5

APPLYING ANALYTIC TECHNIQUES TO BUSINESS Figure 2.1 shows the frequency of daily adjusted closing stock prices falling within continuous data ranges that are equally distributed. The adjusted closing stock prices range is on the x-axis, and the frequency of prices failing within the ranges of adjusting closing stock prices is on the y-axis. The histogram shows an increase and a decrease, with the highest price being at $15 at a frequency of around 175. The histogram is almost symmetrically distributed, meaning the data values are equally spread around the single peak in the middle, but because the mean is greater than the median, it is skewed to the right. (Wathen, 2021) 60000 1000000 2000000 3000000 4000000 5000000 6000000 7000000 More 0 20 40 60 80 100 120 140 160 180 Stock Volume Frequency Volume Frequency Figure 2.2. Histogram of stock volume of Sally Beauty based on data from Yahoo Finance (2023) Figure 2.2 shows the frequency of Sally Beauty’s daily stock volumes being bought or sold within continuous data ranges. The stock volume range is on the x-axis, and the frequency of stock volumes falling within ranges is on the y-axis. The histogram is skewed to the right because there is a single peak, and the values extend more past the peak on the right than the left. 6

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APPLYING ANALYTIC TECHNIQUES TO BUSINESS This indicates unequal distribution, and it can be challenging to determine the daily stock volume for Sally Beauty. Descriptive Statistics Mean, Median, and Standard Deviation of Adjusted Closing Stock Prices The mean, or the average, of Sally Beauty’s adjusted closing stock prices is 12.35 U.S. Dollars, which shows an unhealthy standing of stock The median of Sally Beauty’s adjusted closing stock prices is 12.14 in U.S. Dollars. The median is the middle value in a set of data. The mean is greater than the median, so the data is positively skewed. This means there is a limit to the minimum possible value but no limit on the maximum value. (Statology, 2023) The standard deviation for the adjusted closing stock prices for Sally Beauty is 2.506 in U.S. Dollars. Mean, Median, and Standard Deviation of Daily Traded Stock Volume The mean of Sally Beauty’s daily traded stock volume from November 1, 2022 to October 1, 2023 is 1,66,876. This is a high-volume stock. Volume can indicate market strength. (Mitchell, 2023) The median of Sally Beauty’s stock volume is 1,471,100, less than the mean. The median being less than the mean shows outliers on the right side. (Chen, 2023) This shows that there are significant spikes in the daily stock volume. The standard deviation of the Sally Beauty stock volume is 753,611. This low of a standard deviation indicates a low volatility. (Fidelity, 2023) Lower volatility means it stays relatively stable. Conclusion The representation of both high and low stock prices in the graphs shows decreases in each. This means the demand is down as well. Analyzing the statistical calculations also gives insight, allowing the company to make decisions. Stock prices can help determine decisions for the company, like new products and the operations of the business. A stock price often reflects 7

APPLYING ANALYTIC TECHNIQUES TO BUSINESS an investor's perception of its ability to profit. (Murphy, 2022). Also, high stock can lead to positive press and attention from media and equity analysts. Having a lower stock, like Sally Beauty currently, can give off negative media. (Murphy, 2022) Some trends the leaders should pay attention to are as follows:  While there was a steady increase in the high and low stock prices, both quickly decreased for more than half of the data set;  A big percentage of the adjusted daily closing stock price was frequently in range between 150-200, which should show high demand. By paying attention to the trends in the stocks, leadership can decide if it is wise to launch new products to create awareness and push sales during the latter half of the data set year, which is quarter three and four. When interpreting the histograms for adjusted daily closing stock price, having such a low median shows a higher risk, and when the median for stock volume is also so low, it shows higher demand for stock. Sally Beauty needs to watch the trends of their stock prices and potentially lower stock prices to increase demand. 8

APPLYING ANALYTIC TECHNIQUES TO BUSINESS References (n.d.). Purposes and Values . Sally Beauty Holdings Inc. https://www.sallybeautyholdings.com/our-company/purpose-and-values Sally Beauty Holdings Inc. SWOT Analysis. (2022). Sally Beauty Holdings, Inc. SWOT Analysis, 1–8 (n.d.). Sally Beauty Holdings, Inc. (SBH) . Yahoo Finance. Retrieved November 11, 2023, from https://finance.yahoo.com/quote/SBH/history? period1=1667260800&period2=1698796800&interval=1d&filter=history&frequency=1d &includeAdjustedClose=true Wathen, D.L.W.M.A. S. (2021). Basic Statistics for Business and Economics (10th ed.). McGraw-Hill Higher Education (US). https://capella.vitalsource.com/books/9781264086870 (n.d.). How to Interpret Data where Mean is Greater than Median . Statology. https://www.statology.org/mean-greater-than-median/ Mitchell, C. (2023, September 8). How to Use Stock Volume to Improve Your Trading . Investopedia. https://www.investopedia.com/articles/technical/02/010702.asp#:~:text=Volume %20measures%20the%20number%20of,gathering%20strength%20to%20the %20downside . Chen, J. (2023, March 31). Skewness: Positively and Negatively Skewed Defined With Formula . Investopedia. https://www.investopedia.com/terms/s/skewness.asp#:~:text=Skewness %20tells%20us%20the%20direction,the%20mean%20on%20the%20left . (n.d.). Standard Deviation . Fideility. Retrieved November 11, 2023, from https://www.fidelity.com/learning-center/trading-investing/technical-analysis/technical- indicator-guide/standard-deviation#:~:text=If%20prices%20trade%20in%20a,as %20prices%20become%20more%20volatile . Murphy, C. B. (2022, September 11). Why Do Companies Care About Their Stock Prices? Investopedia. https://www.investopedia.com/investing/why-do-companies-care-about- their-stock-prices/#:~:text=of%20their%20portfolios.-,Risk%20of%20Takeover,its %20market%20value%20is%20cheaper. 9

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