Sally Beauty Holdings, Inc.
For the period ended Mar 31, 2025. Filed May 12, 2025.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Mar 31, 2025 · Filed May 12, 2025
SBH$18.31-2.3%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-12-31; filed 2025-02-13.
0000950170-25-019869
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2025-03-31; filed 2025-05-12.
0000950170-25-069145
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 72 previous paragraphs and 92 current paragraphs.
42 unchanged; 27 reworded; 16 added; 3 removed; 0 previous and 7 current paragraphs rearranged.
Tables are not compared: 6 previous and 8 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (16)
Current report
Consolidated comparable sales decreased 1.3% for the three months ended March 31, 2025;
Current report
SBS’s net sales decrease was driven primarily by the negative impacts from foreign exchange rates, net closed stores, and lower comparable sales. The decrease in comparable sales was primarily a result of external factors that impacted consumer spending, including weather, an unusually harsh flu season and macro uncertainty, partially offset by strong growth in hair color and digital marketplaces.
Current report
SBS. SBS’s selling, general and administrative expenses decreased $1.7 million, or 0.7%, for the three months ended March 31, 2025, and included a favorable impact from foreign exchange rates of $3.4 million. As a percentage of SBS net sales, selling, general and administrative expenses for the three months ended March 31, 2025, were 45.8%, compared to 45.0% for the three months ended March 31, 2024. The increase as a percentage of sales was primarily due to deleveraging resulting from lower net sales, an impairment charge related to a trade name (non-cash expense of $1.8 million), and higher labor and other compensation-related expenses, partially offset by lower advertising expense.
Current report
The decrease in interest expense was driven by a lower outstanding principle balance and interest rate on our Term Loan B, lower losses on debt extinguishment, and lower interest costs related to our senior notes as we incurred interest costs on both our current 2032 Senior Note and our prior 2025 Senior Notes for the brief redemption notice period in the prior year.
Current report
The Six Months Ended March 31, 2025, compared to the Six Months Ended March 31, 2024
Current report
Net Sales
Current report
(a)
Current report
(a)
Current report
BSG’s net sales decrease was primarily driven by reflecting external factors that impacted stylist purchasing behavior, including weather, an unusually harsh flu season and macro uncertainty, and negative impacts from foreign exchange rates, partially offset by continued momentum from expanded distribution and new brand innovation.
Current report
Gross Profit
Current report
Selling, General and Administrative Expenses
Current report
BSG. BSG’s selling, general and administrative expenses decreased $6.9 million, or 3.0%, for the six months ended March 31, 2025. As a percentage of BSG net sales, selling, general and administrative expenses for the six months ended March 31, 2025, were 27.9% compared to 28.4% for the six months ended March 31, 2024. The decrease as a percentage of sales was primarily due to decreases in delivery expense, depreciation expense, and savings generated from our Fuel for Growth initiative.
Current report
Interest Expense
Current report
The decrease in interest expense was driven by a lower outstanding principle balance and interest rate on our Term Loan B, lower losses on debt extinguishment, and lower interest costs related to our senior notes as we incurred interest costs on both our current 2032 Senior Note and our prior 2025 Senior Notes for the brief redemption notice period in the prior year.
Current report
Provision for Income Taxes
Current report
The effective tax rate was 26.3% and 25.6% for the six months ended March 31, 2025 and 2024, respectively. The increase in the effective tax rate was primarily due to foreign operations, offset by the tax impact of share-based compensation which was more detrimental in the prior year.
Removed paragraphs (3)
Previous report
Consolidated comparable sales increased 1.6% for the three months ended December 31, 2024;
Previous report
During the three months ended December 31, 2024, we sold our corporate headquarters located in Denton, Texas to Denton County, Texas for $45.5 million, excluding $1.5 million in closing costs, and recognized a gain of $26.6 million which is included in selling, general and administrative expenses within our condensed consolidated statement of earnings.
Previous report
Interest expense was relatively unchanged but included a decrease in interest on our Term Loan B driven by lower interest rates, partially offset by increased interest costs on our senior notes. Our 2032 Senior Notes compared to our 2025 Senior Notes, reflect a higher interest rate with a lower outstanding principle balance. See Note 10, Short-term and Long-term Debt, in Item 1 of this quarterly report for more information on our debt.
Reworded paragraphs (27)
Previous wording
Consolidated net sales for the three months ended December 31, 2024, increased $6.6 million, or 0.7%, to $937.9 million, compared to the three months ended December 31, 2023. Consolidated net sales included a net negative impact from changes in foreign currency exchange rates of $5.7 million;
Current wording
Consolidated net sales for the three months ended March 31, 2025, decreased $25.2 million, or 2.8%, to $883.1 million, compared to the three months ended March 31, 2024. Consolidated net sales included a net negative impact from changes in foreign currency exchange rates of $9.7 million;
Previous wording
Consolidated gross profit for the three months ended December 31, 2024, increased $9.7 million, or 2.1%, to $476.8 million, compared to the three months ended December 31, 2023. Consolidated gross margin increased 60 bps to 50.8% for the three months ended December 31, 2024, compared to the three months ended December 31, 2023;
Current wording
Consolidated gross profit for the three months ended March 31, 2025, decreased $4.3 million, or 0.9%, to $458.8 million, compared to the three months ended March 31, 2024. Consolidated gross margin increased 100 bps to 52.0% for the three months ended March 31, 2025, compared to the three months ended March 31, 2024;
Previous wording
Consolidated operating earnings for the three months ended December 31, 2024, increased $31.2 million, or 45.1%, to $100.3 million, compared to the three months ended December 31, 2023. Operating margin increased 330 bps to 10.7% for the three months ended December 31, 2024, compared to the three months ended December 31, 2023;
Current wording
Consolidated operating earnings for the three months ended March 31, 2025, increased $9.8 million, or 16.4%, to $69.4 million, compared to the three months ended March 31, 2024. Operating margin increased 130 bps to 7.9% for the three months ended March 31, 2025, compared to the three months ended March 31, 2024;
Previous wording
For the three months ended December 31, 2024, our consolidated net earnings increased $22.6 million, or 58.9%, to $61.0 million, compared to the three months ended December 31, 2023;
Current wording
For the three months ended March 31, 2025, our consolidated net earnings increased $10.0 million, or 34.1%, to $39.2 million, compared to the three months ended March 31, 2024;
Previous wording
For the three months ended December 31, 2024, our diluted earnings per share was $0.58 compared to $0.35 for the three months ended December 31, 2023;
Current wording
For the three months ended March 31, 2025, our diluted earnings per share was $0.38 compared to $0.27 for the three months ended March 31, 2024; and
Previous wording
Cash provided by operations was $33.5 million for the three months ended December 31, 2024, compared to $51.0 million for the three months ended December 31, 2023; and
Current wording
Cash provided by operations was $51.1 million for the three months ended March 31, 2025, compared to $36.9 million for the three months ended March 31, 2024.
Previous wording
Unallocated expenses consist of corporate and shared costs and are included in selling, general and administrative expenses in our condensed consolidated statements of earnings. Additionally, unallocated expenses include costs associated with our Fuel for Growth initiative as well as the $26.6 gain related to the sale of our corporate headquarters during the three months ended December 31, 2024. See Note 7, Property and Equipment, Net, for more information related to the sale of our corporate headquarters.
Current wording
Unallocated expenses consist of corporate and shared costs and are included in selling, general and administrative expenses in our condensed consolidated statements of earnings. Additionally, unallocated expenses include costs associated with our Fuel for Growth initiative as well as the $26.6 gain related to the sale of our corporate headquarters during the six months ended March 31, 2025. See Note 7, Property and Equipment, Net, for more information related to the sale of our corporate headquarters.
Previous wording
SBS. The increase in net sales for SBS was primarily driven by the following (in thousands):
Current wording
SBS. The decrease in net sales for SBS was primarily driven by the following (in thousands):
Previous wording
BSG. The increase in net sales for BSG was primarily driven by the following (in thousands):
Current wording
BSG. The decrease in net sales for BSG was primarily driven by the following (in thousands):
Previous wording
BSG’s net sales increase was primarily driven by an increase in comparable sales, reflecting continued momentum from expanded distribution and new brand innovation.
Current wording
BSG’s net sales decrease was primarily reflecting external factors that impacted stylist purchasing behavior, including weather, an unusually harsh flu season and macro uncertainty and a negative impact from foreign exchange rates, partially offset by continued momentum from expanded distribution and new brand innovation.
Previous wording
SBS. SBS’s gross profit increased for the three months ended December 31, 2024, as a result of an increase in net sales and a higher gross margin on units sold. SBS’s gross margin improvement was driven primarily by higher product margins, resulting from enhanced promotional strategies and benefits from our Fuel for Growth initiative, and lower shrink expense.
Current wording
SBS. SBS’s gross profit decreased for the three months ended March 31, 2025, as a result of lower net sales, partially offset by a higher gross margin. SBS’s gross margin improvement was driven primarily by lower distribution and freight costs, higher product margins resulting from enhanced promotional strategies and benefits from our Fuel for Growth initiative, and lower shrink expense.
Previous wording
BSG. BSG’s selling, general and administrative expenses decreased $2.9 million, or 2.5%, for the three months ended December 31, 2024. As a percentage of BSG net sales, selling, general and administrative expenses for the three months ended December 31, 2024, were 27.4% compared to 28.4% for the three months ended December 31, 2023. The decrease as a percentage of sales was primarily due to higher net sales, lower delivery expenses and other Fuel for Growth benefits.
Current wording
BSG. BSG’s selling, general and administrative expenses decreased $4.0 million, or 3.5%, for the three months ended March 31, 2025. As a percentage of BSG net sales, selling, general and administrative expenses for the three months ended March 31, 2025, were 28.4% compared to 28.5% for the three months ended March 31, 2024. The decrease as a percentage of sales was primarily due to a decrease in depreciation expenses, partially offset by higher labor and other compensation-related expenses.
Previous wording
The effective tax rates were 26.4% and 25.9% for the three months ended December 31, 2024 and 2023, respectively. The increase in the effective tax rate was primarily due to foreign operations for which a tax benefit was not recognized.
Current wording
The effective tax rate was 26.1% and 25.1% for the three months ended March 31, 2025 and 2024, respectively. The increase in the effective tax rate was primarily due to foreign operations and federal tax credits in the prior year.
Previous wording
SBS’s increase in comparable sales was primarily reflecting strong growth in hair color and digital marketplaces.
Current wording
SBS’s net sales decrease was primarily driven by negative impacts from foreign exchange rates and net stores closed during the prior 12 months, partially offset by an increase in comparable sales. The increase in comparable sales was primarily driven by strong growth in hair color and digital marketplaces, partially offset by external factors that impacted consumer spending, including weather, an unusually harsh flu season and macro uncertainty.
Previous wording
BSG. BSG’s gross profit increased for the three months ended December 31, 2024, as a result of an increase in net sales and a higher gross margin on units sold. BSG’s gross margin improvement was driven by lower distribution and freight costs from supply chain efficiencies and lower shrink expense, partially offset by lower product margins related to brand mix.
Current wording
BSG. BSG’s gross profit was relatively unchanged for the six months ended March 31, 2025, as a result of fewer net sales, partially offset by a higher gross margin. BSG’s gross margin improvement was driven by lower distribution and freight costs from supply chain efficiencies and lower shrink expense, partially offset by lower product margins related to brand mix.
Previous wording
SBS. SBS’s selling, general and administrative expenses increased $4.5 million, or 1.9%, for the three months ended December 31, 2024, and included an unfavorable impact from foreign exchange rates of $1.5 million. As a percentage of SBS net sales, selling, general and administrative expenses for the three months ended December 31, 2024, were 44.4%, compared to 43.8% for the three months ended December 31, 2023. The increase as a percentage of sales was primarily due to increased labor and other compensation-related expenses and higher advertising expense, partially offset by a decrease in delivery expenses and other Fuel for Growth benefits.
Current wording
SBS. SBS’s selling, general and administrative expenses increased $2.8 million, or 0.6%, for the six months ended March 31, 2025, and included a favorable impact from foreign exchange rates of $4.9 million. As a percentage of SBS net sales, selling, general and administrative expenses for the six months ended March 31, 2025, were 45.1%, compared to 44.4% for the six months ended March 31, 2024. The increase as a percentage of sales was primarily due to increased labor and other compensation-related expenses and an impairment charge related to a trade name (non-cash expense of $1.8 million), partially offset by other Fuel for Growth benefits.
Previous wording
Unallocated. Unallocated selling, general and administrative expenses, which represent certain corporate costs that have not been charged to our reporting segments, decreased $23.2 million, or 43.6%, for the three months ended December 31, 2024, primarily due to a $26.6 million gain on the sale of our corporate headquarters, partially offset by increased labor and other compensation-related expenses.
Current wording
Unallocated. Unallocated selling, general and administrative expenses, which represent certain corporate costs that have not been charged to our reporting segments, decreased $31.5 million, or 27.8%, for the six months ended March 31, 2025, primarily due to a $26.6 million gain on the sale of our corporate headquarters, lower professional fees and severance costs in connection to our Fuel for Growth initiative, and lower depreciation expense, partially offset by increased labor and other compensation-related expenses.
Previous wording
Our principal sources of liquidity are cash from operations, cash and cash equivalents and borrowings under our ABL facility. A substantial portion of our liquidity needs arise from funding the costs of our operations, working capital, capital expenditures, debt interest and principal payments. Additionally, under our share repurchase program (see below for more details) we will from time to time repurchase shares of our common stock on the open market to return value to our shareholders. At December 31, 2024, we had $588.2 million of available liquidity, which includes $482.7 million available for borrowing under our ABL facility and cash and cash equivalents of $105.5 million.
Current wording
Our principal sources of liquidity are cash from operations, cash and cash equivalents and borrowings under our ABL facility. A substantial portion of our liquidity needs arise from funding the costs of our operations, working capital, capital expenditures, debt interest and principal payments. Additionally, under our share repurchase program (see below for more details) we will from time to time repurchase shares of our common stock on the open market to return value to our shareholders. At March 31, 2025, we had $574.9 million of available liquidity, which includes $482.7 million available for borrowing under our ABL facility and cash and cash equivalents of $92.2 million.
Previous wording
Our working capital (current assets less current liabilities) decreased $14.5 million, to $698.1 million at December 31, 2024, compared to $712.6 million at September 30, 2024. The decrease was primarily driven by lower inventory, as a result of a strategic reduction in slower moving products and the negative impacts of foreign exchange rates of $15.0 million, the disposal of assets held for sale previously included in other current assets as a result of the sale of our corporate HQ, and the timing of lease renewals, partially offset by the timing of accounts payable.
Current wording
Our working capital (current assets less current liabilities) decreased $6.8 million, to $705.8 million at March 31, 2025, compared to $712.6 million at September 30, 2024. The decrease was primarily driven by lower inventory, as a result of a strategic reduction in slower moving products and the negative impacts of foreign exchange rates of $9.2 million, the disposal of assets held for sale previously included in other current assets as a result of the sale of our corporate headquarters, and the timing of lease renewals, partially offset by the timing of accounts payable.
Previous wording
The decrease in cash provided by operating activities was primarily driven by the timing of accounts payable and tax payments, partially offset by lower inventory purchases, the timing of debt interest payments and higher cash receipts from customers.
Current wording
The decrease in cash provided by operating activities was primarily driven by the timing of accounts payable and income tax payments and lower cash receipts from customers, partially offset by lower inventory purchases and the timing of debt interest payments.
Previous wording
For the three months ended December 31, 2024, net cash provided was primarily a result of receiving $44.0 million from the sale of our corporate headquarters. Additionally, we had lower capital expenditures as we lapped system upgrades in the prior year, while current spend related primarily to store improvements.
Current wording
The change in investing activities was primarily the result of receiving $43.6 million from the sale of our corporate headquarters and lower capital expenditures as we lapped technology investments in the prior year, offset by investments in store improvements.
Previous wording
The increase in cash used by financing activities was primarily due to the $40.0 million early repayment on our term loan, partially offset by fewer shares repurchased in the current year under our share repurchase program.
Current wording
The increase in cash used by financing activities was primarily due to the higher net paydown of our long-term debt in the current year compared to the prior year, partially offset by fewer shares repurchased in the current year under our share repurchase program and lower issuance costs related to our debt financing activities.
Previous wording
At December 31, 2024, we had $942.2 million in outstanding debt principal, excluding finance lease obligations, unamortized debt issuance costs and debt discounts, in the aggregate, of $10.8 million. Our debt consists of $600.0 million in 2032 Senior Notes outstanding, and $353.0 million remaining on our Term Loan B. There were no outstanding borrowings under our ABL facility.
Current wording
At March 31, 2025, we had $917.0 million in outstanding debt principal, excluding finance lease obligations, unamortized debt issuance costs and debt discounts, in the aggregate, of $10.2 million. Our debt consists of $600.0 million in 2032 Senior Notes outstanding, and $317.0 million remaining on our Term Loan B. There were no outstanding borrowings under our ABL facility. See Note 10, Short-term and Long-term Debt, in Item 1 of this quarterly report for more information on our debt.
Previous wording
We utilize our ABL facility for the issuance of letters of credit, certain working capital and liquidity needs, and to manage normal fluctuations in our operational cash flow. In that regard, we may from time to time draw funds under the ABL facility for general corporate purposes including funding of capital expenditures, acquisitions, paying down other debt and share repurchases. Amounts drawn on our ABL facility are generally paid down with cash provided by our operating activities. During the three months ended December 31, 2024, the weighted average interest rate on our borrowings under the ABL facility was 7.0%.
Current wording
We utilize our ABL facility for the issuance of letters of credit, certain working capital and liquidity needs, and to manage normal fluctuations in our operational cash flow. In that regard, we may from time to time draw funds under the ABL facility for general corporate purposes including funding of capital expenditures, acquisitions, paying down other debt and share repurchases. Amounts drawn on our ABL facility are generally paid down with cash provided by our operating activities. During the six months ended March 31, 2025, the weighted average interest rate on our borrowings under the ABL facility was 7.3%.
Previous wording
The following table presents the summarized statement of earnings information for the Issuers and the Guarantors for the three months ended December 31, 2024 (in thousands):
Current wording
The following table presents the summarized statement of earnings information for the Issuers and the Guarantors for the six months ended March 31, 2025 (in thousands):
Previous wording
Under our current share repurchase program, we may from time to time repurchase our common stock on the open market. During the three months ended December 31, 2024 and 2023, we repurchased 0.8 million shares and 1.9 million shares of our common stock for $10.0 million and $20.0 million, respectively, under our share repurchase program, excluding the impact of excise taxes. See Note 5, Stockholders’ Equity, for more information about our share repurchase program.
Current wording
Under our current share repurchase program, we may from time to time repurchase our common stock on the open market. During the six months ended March 31, 2025 and 2024, we repurchased 1.1 million shares and 1.8 million shares of our common stock for $10.0 million and $20.0 million, respectively, under our share repurchase program, excluding the impact of excise taxes. See Note 5, Stockholders’ Equity, for more information about our share repurchase program.
Previous wording
There have been no material changes to our critical accounting estimates or assumptions since September 30, 2024.
Current wording
There have been no material changes to our critical accounting estimates or assumptions as disclosed in Item 7. "Management Discussion and Analysis of Financial Condition and Results of Operation" in Part II on our Annual Report on Form 10-K for the fiscal year ended September 30, 2024.
Rearranged current paragraphs (7)
Current report — wording carried from elsewhere
BSG. BSG’s gross profit decreased for the three months ended March 31, 2025, as a result of lower net sales, partially offset by a higher gross margin. BSG’s gross margin improvement was driven by lower distribution and freight costs and lower shrink expense, partially offset by lower product margins related to brand mix
Current report — wording carried from elsewhere
Unallocated. Unallocated selling, general and administrative expenses, which represent certain corporate costs that have not been charged to our reporting segments, decreased $8.3 million, or 13.8%, for the three months ended March 31, 2025, primarily due to lower professional fees and severance costs in connection to our Fuel for Growth initiative, lower labor and other compensation-related expenses, and savings generated from our Fuel for Growth initiative.
Current report — wording carried from elsewhere
SBS. The decrease in net sales for SBS was primarily driven by the following (in thousands):
Current report — wording carried from elsewhere
Includes closed stores, net of stores opened for less than 14 months.
Current report — wording carried from elsewhere
BSG. The decrease in net sales for BSG was primarily driven by the following (in thousands):
Current report — wording carried from elsewhere
Includes closed stores, net of stores opened for less than 14 months and sales from acquired stores.
Current report — wording carried from elsewhere
SBS. SBS’s gross profit increased for the six months ended March 31, 2025, as a result of lower net sales, partially offset by a higher gross margin. SBS’s gross margin improvement was primarily driven by lower distribution and freight costs, higher product margins, resulting from enhanced promotional strategies and benefits from our Fuel for Growth initiative, and lower shrink expense.