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Sally Beauty Holdings Inc. (NYSE:SBH) on Thursday reported its fourth-quarter financial results, beating street estimates.
The company reported adjusted earnings of 55 cents per share, beating analysts' estimates of 47 cents and marking a 10% increase from a year earlier.
Quarterly net sales rose 1.3% to $947.08 million, exceeding expectations of $932.9 million, with consolidated comparable sales up 1.3%.
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The company's adjusted operating margin held steady at 9.4%, unchanged from the prior year, while its adjusted EBITDA margin edged down to 12.4% from 12.6% a year ago.
Adjusted selling, general, and administrative expenses were $405 million, an increase of $14 million compared with the same period last year.
Cash and cash equivalents stood at $149.16 million as of September 30, 2025.
During the fourth quarter, Sally Beauty Holdings generated $121 million in cash flow from operations and $78 million in free cash flow.
The company used its cash to repay $21 million of term loan B debt and repurchase 1.7 million shares for a total of $20 million under its share repurchase program.
For the fourth quarter ended September 30, 2025, Sally Beauty Supply reported net sales of $541.55 million, up 1.4% the year-earlier period, with comparable sales growth of 1.2% compared to 2.6% in the prior year.
The segment's gross margin improved to 61.3% from 60.4%, and operating earnings were $86.18 million, representing an operating margin of 15.9%.
The Beauty Systems Group (BSG) segment posted net sales of $405.52 million, a 1.1% increase from the same period last year, with comparable sales up 1.4% versus 1.3% a year ago.
Gross margin for BSG rose to 40.0% from 39.0%, while operating earnings came in at $51.28 million, reflecting an operating margin of 12.6%.
For the full year fiscal 2026, Sally Beauty Holdings expects consolidated net sales between $3.71 billion and $3.77 billion versus $3.69 billion analyst estimate, with comparable sales projected to be flat to up 1%.
The company forecasts adjusted operating earnings of $328 million to $342 million and adjusted diluted EPS in the range of $2.00 to $2.10 versus $1.82 estimate.
For the first quarter of fiscal 2026, the company forecasts consolidated net sales of $935 million to $945 million versus $946.43 million analyst estimate, with comparable sales roughly flat year over year.
Adjusted operating earnings are expected to range between $75 million and $80 million, and adjusted diluted EPS between 43 cents and 47 cents, versus the 50 cents analyst estimate.
The company outlined new three-year financial planning through fiscal 2028, projecting annual consolidated net sales growth of 1% to 3% and adjusted operating earnings growth of 3% to 5%.
Adjusted diluted EPS is expected to grow by more than 10% annually, supported by the deployment of about 50% of free cash flow toward share repurchases.
The company also plans for annual capital expenditures between $90 million and $120 million and aims to generate approximately $200 million in free cash flow each year.
Denise Paulonis, president and chief executive officer, said, "We concluded the year with fourth quarter results that exceeded our expectations, highlighted by solid topline growth and healthy gross margins that drove 10% adjusted EPS growth and robust free cash flow. Importantly, sharp execution against our strategic initiatives drove broad-based strength across both our Sally and BSG segments."
The company has 19.37 million shares sold short, representing 35.66% of its publicly traded float, indicating a relatively high level of short interest among investors betting against the stock.
Price Action: SBH shares were trading higher by 15.94% to $17.02 at last check Thursday.
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Posted In: SBH
