Sally Beauty Holdings (SBH) Q3 2025 earnings summary

Executive summary

• Achieved fourth consecutive quarter of operating margin expansion and double-digit EPS growth, driven by the Fuel for Growth program.

• Consolidated net sales were $933 million, down 1% year-over-year, with comparable sales down 0.4%.

• Adjusted operating margin reached 9.2%, up 30 basis points year-over-year, and adjusted diluted EPS was $0.51, a 13% increase.

• Operating earnings rose 8.9% to $78.2 million, and net earnings increased 21.2% to $45.7 million year-over-year.

• Strong cash flow enabled $21 million in debt repayment and $13 million in share repurchases.

Financial highlights

• GAAP gross margin expanded 50 basis points to 51.5%; adjusted gross margin up 100 basis points to 52%.

• Adjusted operating earnings were $86 million (9.2% margin), up from $84 million (8.9%).

• Adjusted EBITDA was $115 million, down 1.3% year-over-year; margin flat at 12.4%.

• Year-to-date adjusted operating profit up 6%, with 60 basis points of margin expansion.

• Cash flow from operations was $69 million; free cash flow $49 million.

Outlook and guidance

• Full-year adjusted operating margin guidance raised to 8.6%-8.7% (previously 8.0%-8.5%).

• Full-year comparable sales expected to be approximately flat, at the high end of previous guidance.

• Net sales expected to be about 75 basis points lower than comparable sales due to FX and store closures.

• Q4 adjusted operating margin expected to be down modestly due to increased marketing investment.

• Management anticipates sufficient liquidity to fund working capital and capital expenditures over the next twelve months.