Sally Beauty Holdings, Inc.

Fiscal Q3 net sales were $935 million, approximately flat year over year, with consolidated comparable sales flat. Adjusted gross margin expanded 40 basis points to 52.4%, adjusted operating income was $87 million, and adjusted diluted EPS was $0.55, up 8% versus last year. On a segment basis, Sally Beauty sales grew 2.2% to $539 million with 61.5% gross margin and 16.6% operating margin, while BSG sales declined 2.4% to $397 million with 40.1% gross margin and 12.3% operating margin. For full-year fiscal 2026, management now expects net sales of $3.725 billion to $3.733 billion, comparable sales of about 0.5%, adjusted operating earnings of $329 million to $335 million, and adjusted diluted EPS of $2.04 to $2.08. Free cash flow is expected to be approximately $200 million, capex about $100 million, and 50% of free cash flow is expected to go to share repurchases.

Denise Paulonis said the quarter showed the business is executing well, with results within guidance and strategic initiatives helping drive growth. She highlighted Sally’s momentum in color, fragrance, and new categories like men’s and skin, while saying the care reset and assortment changes should improve performance over coming quarters. Her tone was upbeat and confident, but she repeatedly noted that the company is still watching promotional behavior and consumer selectivity closely.

Adrianne Lee emphasized that the company maintained healthy profitability through disciplined cost control and Fuel for Growth savings. She cited adjusted SG&A of $404 million, up $5 million year over year, adjusted gross margin of 52.4%, and pre-tax Fuel for Growth benefits of $9 million in the quarter; she also said the company remains on track for about $45 million of savings in fiscal 2026 and roughly $120 million of cumulative run-rate savings by year-end. On the balance sheet, cash and equivalents were $173 million, inventory was $996 million, free cash flow was $62 million, and the company repaid $20 million of term loan debt and repurchased $25 million of stock, bringing net debt leverage to 1.4x.

Analysts focused on the care reset, fragrance, the split between Sally U.S./Canada and international markets, BSG softness, and the impact of promotions. Management said the care reset is still very early, but store and associate feedback is positive, and fragrance is mostly an add-on purchase from existing customers rather than a new-customer driver. On BSG, management pointed to a tough lap versus K18, steady stylist sentiment, and the need for more value messaging and newness; on promotions, they said activity has increased but not materially changed versus 90 days ago.