You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. 
Text: With me on the call today are Chris Brickman, President and Chief Executive Officer; and Marlo Cormier, Chief Financial Officer.
We hope that you are all safe and well.
At SBH, we are fortunate to have an incredible community of team members customers and partners that continue to help us navigate this dynamic environment.
In the first quarter, our associates across the organization delivered strong execution despite the ongoing challenges of the pandemic.
During a time of significant retail disruption, they remain focused on safely serving our customers and continue to implement the key initiatives we outlined on our year-end earnings call in November.
This allowed us to deliver strong gross margins, profitability and cash flow despite top line headwinds caused by the pandemic.
Indeed, for much of the quarter, especially in the latter weeks, we were operating against the backdrop of temporary store closures, capacity restrictions, salon shutdowns and an acceleration in COVID rates that most certainly impacted traffic in our open locations.
As a result, enterprise same-store sales declined 3.7%.
For added perspective at the end of the quarter, approximately 45% of our store locations were under some level of capacity restriction or closure across the globe.
During the quarter, we saw ongoing strength in hair color, which is our chief recruitment vehicle for new customers, both for the retail consumer and the professional stylist.
Hair care is closely linked to color while other categories like nails, skin and wax are incremental and drive additions to the basket.
Despite the top line disruptions, hair color was up 19% at Sally U.S. and Canada.
In addition, vivid colors remained on trend and delivered another quarter of strong performance, up approximately 50% at Sally U.S. and Canada over the prior year.
In Q1, vivid accounted for 25% of our total color sales and they continue to attract a new and younger customer to our stores.
Finally, nails were up 7% at Sally U.S. and Canada and salon supplies were up over 50% at BSG compared to the prior year.
Although we were operating under challenging circumstances, our expanded digital capabilities enabled us to serve our customers through multiple fulfillment options.
These include buy online/pick up in-store, curbside pickup and ship from store at Sally Beauty and same-day delivery and curbside pickup at BSG stores.
Additionally, our e-commerce business achieved strong growth, up 48% versus a year ago.
Despite the external pressures of the macro environment, our teams also did an excellent job on margin and expense control, which resulted in first quarter adjusted earnings per share of $0.50, up 6% on a year-on-year basis.
We ended the quarter with inventory down 10% compared to the prior year and approximately $538 million of cash on the balance sheet.
Subsequent to the close of the quarter, we made the strategic decision to repay the outstanding balance on our fixed rate term loan, making further progress toward deleveraging our balance sheet.
More on this from Marlo later in the call.
As we reflect back on the investments we've made and the hard work of our teams over the past 3.5 years, today, we have a business that is well positioned from a strategic, operational and financial perspective.
During our successful transformation journey, we accomplished a number of objectives that set us up to scale over the long term.
One, we refocused the business on owning professional hair color and care for both the DIY enthusiasts and the professional stylists.
Two, we improved our retail fundamentals.
Three, we advanced our digital commerce capabilities.
Four, we modernized our supply chain.
Five, we improved the shopping experience, both in-store and online.
And six, we strengthened our retail leadership team.
Today, we are executing against a well-defined operating strategy and growth plan.
In fiscal 2021, we are focusing on three major priorities.
By the end of the year, we expect to have completed the key elements of our transformation, including the full implementation of JDA and the replatforming of our BSG e-commerce site.
Second, we expect to be leveraging all of our new capabilities and tools in service of our mission to recruit and retain color customers.
And third, we expect to further reduce our debt leverage ratio closer to our target of 2.5.
From a tactical perspective, in fiscal 2021, our teams are working to optimize the transformation investments we've made and unlock more robust functionality across retail fundamentals, digital commerce and supply chain.
Let me take you through our key initiatives.
First is our expanded delivery service model.
As I mentioned earlier, our new capabilities are enabling us to serve our customers with multiple fulfillment options, which we believe will ultimately foster greater customer loyalty and stickiness.
It's early days but adoption rates are growing fast.
For example, At Sally U.S. and Canada, BOPIS accounted for 11% of our e-commerce sales for the quarter after launching nationwide in November.
And BOPIS sales surpassed 20% of our e-commerce sales for the month of December, while ship from store represented 31% of our e-commerce sales during the quarter.
On the BSG side, same-day delivery is adding tremendous value to our professional stylists by providing them with the flexibility to quickly react to the needs of their customers and adeptly manage their business.
In the second half, we'll be adding the rollout of BOPIS to the BSG segment, providing another element of convenience for our stylists.
The second initiative is replatforming the BSG digital storefront, which is on track for completion in early Q3.
This new, more robust platform will enable deeper and more effective digital engagement with our stylists as we move along the customer funnel from recruitment to transaction.
The digital journey begins with a focus on education, innovation and tools that enable them to more effectively and profitably run their business, including features like product reorders, easy bulk orders, simplified tax reporting and navigation enhancements.
Turning now to our third area of focus, loyalty and CRM.
We are rapidly gaining traction on the rollout of our Private Label Rewards Credit Card to both Sally and BSG customers in the U.S. At the end of the first quarter, we had 163,000 cardholders.
And our rewards card accounted for 2% of sales in the Sally segment and 5% in the BSG segment.
We're capturing critical insights into customer needs and purchasing behavior and expect this program to grow significantly in the coming months and quarters.
In addition, we have bolstered our marketing team in recent months and now have the talent to exploit this data and utilize CRM to develop highly targeted digital programs and strengthen the connected shopping experience across marketing, commerce and service.
We expect loyalty to become another critical differentiator for SBH and something that further expands our competitive moat.
The fourth key initiative for fiscal 2021 is completing the rollout of JDA, our new merchandising and supplying platform.
Both JDA and our new North Texas distribution center are running smoothly in the initial months.
And our teams are working to bring JDA to our remaining DCs in the latter part of this year.
This will be a significant milestone as it represents the final step in our multiyear transformation journey.
Through our thoughtful investments and strategic repositioning over the past three to four years, we have evolved SBH into a market leader with a solid infrastructure and robust digital capabilities that position us to own professional hair color and care.
Underlying this is our continued focus on generating strong profitability and cash flow and returning value to shareholders.
There is certainly more work to do as we shift from the heavy lifting of our transformation to a new phase of growth that will see us optimize and drive scale.
We believe our ability to generate strong cash flow, carefully manage inventories and prudently control discretionary spending will allow us to continue to strategically invest in capabilities, tools and teams in support of our mission to recruit and retain color customers.
As we move through the first half of fiscal 2021, it is clear that the environment will continue to be choppy, creating additional top line headwinds at least in the near term.
Today, we are operating under mandated store closures in Europe, Canada and Latin America, capacity restrictions in several domestic markets and reduced capacity at salons in California, which were closed for most of January.
Because these disruptions are continuing and there is still a great deal of uncertainty related to potential restrictions going forward, we expect net sales to decline in our second fiscal quarter, softening modestly from Q1 levels.
During this time, we are remaining agile and our teams are running the business with operational and financial rigor to preserve profitability and prudently manage cash.
Most importantly, with our transformation journey nearing completion, we feel highly confident in our competitive positioning, the strong foundation we've built and the capabilities we've established and the ability of our teams to execute.
In short, we believe SBH is positioned for a return to consistent top line growth when pandemic headwinds abate.
Before turning the call to Marlo, I want to express my appreciation to all of our team members and associates around the globe for playing an important role in our successful transformation and continuing to work tirelessly in service of our customers as we navigate the dynamic COVID environment.
I also want to say how pleased we are to have Marlo in the role of Chief Financial Officer.
After joining us last spring as Senior Vice President of Finance, she has quickly and seamlessly transitioned to the new position and serves as a valuable member of our executive team.
Now over to Marlo to discuss the financials.
I've been with the company now for 10 months.
So I was really able to hit the ground running when I assumed the CFO position in November.
I've enjoyed the opportunity to speak with some of you at recent virtual conferences and marketing days and look forward to continuing to get to know our SBH shareholders.
Turning now to the financials.
You heard from Chris that COVID disruptions put tremendous pressure on the top line this quarter.
After a strong start in October, new restrictions set in during November.
And by the end of Q1, approximately 45% of our stores globally were operating under capacity restrictions or closures.
This resulted in a consolidated same-store sales decline of 3.7%.
In our open locations, traffic was choppy and declined on a year-over-year basis.
Despite lower traffic, we saw increases in average ticket, units per transaction and average unit retail versus the first quarter of fiscal 2020.
Our global e-commerce business remained strong in Q1 with consolidated sales up 48% versus one year ago.
As we continue to optimize our new digital capabilities, we expect e-commerce to become an increasingly larger part of the overall business over time.
Looking now at gross profit.
Our fewer, bigger, deeper strategy continues to drive underlying margin strength.
First quarter gross margin came in at 50.3%, up 190 basis points to last year.
The year-over-year increase reflects strength in the Sally segment particularly in the U.S. and Canada.
This was partially offset by margin pressure at BSG as lower inventory levels drove higher capitalized costs.
Looking at the remainder of fiscal 2021.
We anticipate that our targeted promotional strategy will allow us to continue to deliver strong consolidated gross margin in the range of 50%.
SG&A expenses totaled $366 million in Q1, down $12 million versus last year.
The savings can primarily be traced to lower field labor and advertising costs and reflects our ability to pull expense levers as needed while pandemic headwinds persist.
As we expected, as a percentage of sales, SG&A deleveraged on a year-over-year basis, coming in at 39.1%, up 50 basis points from Q1 of 2020 due to lower sales volume.
Looking at Q2, we expect SG&A dollars to be flat to up slightly on a sequential basis from Q1.
This primarily reflects investments in digital marketing in both the Sally and BSG segments as well as IT spending as we continue to deploy and scale our new tools and capabilities.
These investments will be partially offset by lower field labor costs and variable expenses.
On a full year basis, we expect SG&A dollars to increase versus fiscal 2020 with spending primarily directed toward additional marketing and IT spend in the back half of the year.
As a reminder, we will also be lapping last year's furloughs and rent abatements.
As Chris said, we are pleased with the success of our transformation journey.
And the investments we have made to date are clearly bearing fruit.
If we began to see pandemic headwinds abating, we will make selective investments in other key growth areas during the latter part of the year.
Our solid gross margins and careful cost controls allowed us to deliver strong performance across operating income, EBITDA and EPS.
In Q1, adjusted operating margin was up 130 basis points to 11.2%.
Adjusted EBITDA increased 5% to $134 million and adjusted diluted earnings per share grew 6% to $0.50.
Moving to segment results.
I'll start with Sally Beauty.
The first quarter same-store sales decline of 3.3% can largely be traced to extensive closures and restrictions in Europe and Latin America.
In the U.S. and Canada, same-store sales declines were less than 1%.
And gross margin remained strong, reflecting the effectiveness of our new promotional strategy.
This drove a significant increase in segment operating margin, which expanded 440 basis points to 17.4%.
E-commerce remained strong, up 46% versus one year ago.
In our BSG segment, same-store sales declines of 4.6% and primarily reflect restrictions on store capacity across several territories in the U.S. and Canada and salon closures in California and parts of Canada.
E-commerce remained strong, delivering growth of 51% over the prior year.
Gross margin decreased by 40 basis points, reflecting higher capitalized costs due to lower inventory purchases.
Looking at the balance sheet and cash flow.
We ended the first quarter with $538 million of cash on the balance sheet and a zero balance on our $600 million revolving line of credit.
Inventories at quarter end totaled $896 million.
That's down 10% versus one year ago and reflects our efforts to return to more optimal levels.
As we talked about on our Q4 earnings call, we exited the year with a focus on rebuilding inventories.
We made good progress and significantly improved our in-stocks during Q1.
That said, we did face some COVID disruptions and port delays particularly in the BSG segment.
As a result, first quarter cash flow from operations came in better than we anticipated at $39 million.
And we anticipate this will pressure cash flow in Q2.
Capital expenditures totaled $15 million and were deployed mostly toward store repair and maintenance and digital capabilities, most notably buy online/pick up in-store.
which, as you heard from Chris, is gaining good traction.
Free cash flow was $24 million for the quarter.
At the end of Q1, our leverage ratio stood at 2.78 times.
For comparison purposes, the leverage ratio that we often cite, as defined in our loan agreement, where the impact of cash on hand is capped at $100 million for net debt calculation purposes was 3.73 times.
After the close of the quarter, we further reduced our debt levels by another $213 million in early January, which is consistent with our philosophy to deleverage the balance sheet.
Going forward, we expect to continue to utilize excess cash to reduce debt and return value to shareholders.
In fiscal 2021, we expect to make additional progress toward bringing our debt leverage ratio closer to our target of 2.5 times.
As we look at the balance of the year, we expect the environment to remain choppy as COVID disruptions persist.
With closures and restrictions continuing thus far into the second quarter, we anticipate that Q2 net sales trends will soften moderately from Q1 levels.
Until we see a definitive shift in the macro factors affecting our top line, we will continue to operate prudently and remain focused on the operating initiatives Chris talked about, which we believe are setting us up to achieve consistent growth and long-term success.
And now we'll ask the operator to open the call to Q&A.

user
compname posts q1 gaap earnings per share $0.50.
q1 gaap earnings per share $0.50.
qtrly adjusted diluted earnings per share of $0.50.
qtrly consolidated same store sales decreased 3.7%,.
will not be providing formal guidance at this time.

assistant