Sally Beauty Earnings
Sally Beauty Posts Q3 Profit Beat, Revenue Miss; Stock Dips Pre-Market
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Key Points
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Beauty Systems Group revenue declined 2.4% year over year to $396.9 million, highlighting a segment with shrinking top line compared with the Sally Beauty retail business.
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Sally U.S. and Canada segment posted a 1.6% increase in comparable sales, with revenue rising 2.2% year over year to $538.6 million.
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Full-year revenue guidance midpoint was set at $3.729 billion, slightly below analysts' consensus of about $3.74 billion.
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E-commerce sales rose 11% to about $110 million in the quarter, illustrating continued online growth despite flat overall comps.
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GAAP gross margin expanded by 90 basis points to 52.4%, and the company carried a net debt leverage ratio of approximately 1.4x, signaling improved profitability and financial flexibility.
Sally Beauty Holdings beat earnings expectations but missed on revenue in its fiscal third quarter of 2026, sending shares down about 3% in pre-market trading. The company posted adjusted earnings of $0.55 per share on revenue of $935.5 million, topping the earnings forecast while falling short of Wall Street's revenue target, according to Yahoo Finance.
Total revenue rose just 0.2% year over year, and comparable sales were flat overall. The mixed results put investors on edge even as management pointed to online growth and a stronger Sally-branded retail segment.
Sally Retail Gains While Beauty Systems Group Slips
The company's two main segments told different stories. The Sally U.S. and Canada retail segment posted revenue of $538.6 million, up 2.2% year over year. Comparable sales in that segment rose 1.6%, driven by strength in hair color, digital sales, and new customer growth, according to StockStory.
Beauty Systems Group, which serves professional salons, was a drag. That segment's revenue fell 2.4% year over year to $396.9 million. The decline showed that the pro salon side of the business continues to struggle even as the consumer retail side picks up steam.
E-Commerce Jumps 11% as Gross Margin Expands
One bright spot was online sales. E-commerce revenue climbed 11% in the quarter to about $110 million. That growth came even as total comparable sales stayed flat, showing that customers who do shop Sally Beauty are increasingly doing it online.
Profitability also improved. GAAP gross margin expanded by 90 basis points to 52.4%. Operating cash flow hit $81 million. The company used that cash to buy back $25 million in shares and pay down $20 million of term debt. Net debt leverage stood at roughly 1.4 times, giving the company financial flexibility, per StockStory.
Full-Year Guidance Lands Just Below Analyst Consensus
Sally Beauty narrowed its full-year revenue guidance to a range of $3.725 billion to $3.733 billion. The midpoint of that range is $3.729 billion — slightly below the analyst consensus of about $3.74 billion. The company kept its adjusted EPS outlook steady at $2.04 to $2.08, according to Market Screener.
The guidance miss on revenue added to investor concern. Even with the earnings beat, the stock fell about 3% before the market opened. Analysts will be watching whether the Sally retail segment's momentum can offset continued weakness in the professional salon business through the rest of the fiscal year.
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