Sally Beauty Holdings (SBH) Q2 2026 earnings summary

Executive summary

• Q2 consolidated net sales rose 2.3% year-over-year to $903 million, with comparable sales up 1.3% at the high end of expectations.

• Adjusted operating income was $73 million and adjusted diluted EPS was $0.44, both above guidance; GAAP diluted EPS increased 13% to $0.43.

• Strong cash flow from operations of $73 million enabled $20 million in debt paydown and $25 million in share repurchases, including 1.7 million shares.

• E-commerce sales grew 13% year-over-year, now 12% of total net sales, driven by digital initiatives.

• Strategic initiatives in marketing, digital, and product innovation drove segment growth, especially in Sally U.S. and Canada.

Financial highlights

• Consolidated net sales rose 2.3% year-over-year to $903 million, with 150 basis points of FX benefit, offset by 47 fewer stores.

• Adjusted gross margin expanded 80 basis points to 52.8%; GAAP gross margin up 70 bps to 52.7%.

• Adjusted SG&A was $404 million, up $20 million year-over-year, mainly due to labor, rent, and FX, partially offset by $3 million in Fuel for Growth savings.

• Free cash flow was $44 million; cash equivalents at quarter end were $157 million.

• Inventory at quarter-end was $987 million, down 2% year-over-year.

Outlook and guidance

• FY26 net sales expected between $3.725 billion and $3.75 billion, with 50 basis points FX benefit; comparable sales expected flat to up 1%.

• Adjusted operating earnings forecasted at $328–$342 million; adjusted diluted EPS at $2.02–$2.10.

• Q3 net sales guidance: $932–$942 million; adjusted EPS: $0.52–$0.56.

• FY26 free cash flow expected at ~$200 million; capex expected at $100 million.

• 50% of free cash flow to be used for share repurchases.