In general, have we seen consumers looking for sources of value? Absolutely. I mentioned to Simeon, that our BSG business, our vendors had supported some additional promotional activity. That’s true on the Sally side as well. In aggregate, promotions are not up meaningfully but a little bit more lean in where we can get value to customers is something that they’re certainly looking for and certainly taking advantage of when that comes to life.
Unidentified Analyst: That’s super helpful. And then on the supply chain optimization, it sounds like you’re going to be saving $50 million there and you’ve talked about a $10 million benefit to operating income this year. I was wondering if you — should we think about you reinvesting the savings that the rest of that $40 million — or is that just a timing benefit where that $10 million should grow over time?
Denise Paulonis: Yes. Marlo, do you want to explain the economics around that?
Marlo Cormier: Yes, a little bit. So that’s our optimization program, which includes both the DC consolidation as well as our store closures. And so the bulk of that work was done towards the end of Q1. So from a year-over-year perspective, you do get a little bit of wrap around. So what we described was a $50 million savings in SG&A, and that translates to $10 million of improvement on the operating earnings line. So we get a little bit of lift of that when you look at it on an annualized basis with a little bit of wrap around next year. In terms of looking at it from what is offsetting that, that program is designed to help us offset much of the cost pressures that we’ve seen. And most of those have been coming in terms of labor.
And so what also is happening this year is our increased investment in our wages, which also goes into effect at the beginning of the calendar year. So there are times fairly close to each other so that you do see that offset as we progress through the year. We have made a conscious decision to invest in our labor. It’s important. Our associates are a very important part of our differentiator. They are an important element of driving our growth initiatives. So we believe that’s a very important investment to make, and that will step up as well as we have this current quarter in Q2. And I would just add the important part of getting from $50 million to $10 million this year that we’ve talked about on our call is — the difference between that is really the sales loss.
So while we’d love to recapture every dollar of sales, the difference between there reflects the fact that we believe we’ll recapture 40% of the sales from the closed stores. So that’s really the differential we’re getting from the $50 million to the $10 million.
Operator: And Next, we can go to Carla Casella with JPMorgan.
Unidentified Analyst: This is Mike on for Carla. Just wanted to ask, have you guys thought about how you think about addressing the 2024 term loan maturity.
Denise Paulonis: Yes. Marlo, you want to talk about that?
Marlo Cormier: Sure. Yes. So we’ve reported in the past, we’re continuing to monitor the market for opportunistic refinancing opportunities. We are a strong cash flow generator, and that gives us the flexibility to continue to watch those markets. So we’re continuing to do that.
Unidentified Analyst: Great. And then this is a second one from us. Any difference in terms of kind of trade-down activity you’re seeing on the Sally side or the BSG side?
