Sally Beauty Holdings, Inc.
For the period ended Dec 31, 2025. Filed Feb 9, 2026.
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.
Dec 31, 2025 · Filed Feb 9, 2026
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 2025-06-30; filed 2025-08-05.
0000950170-25-103040
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2025-12-31; filed 2026-02-09.
0001193125-26-042785
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 94 previous paragraphs and 70 current paragraphs.
39 unchanged; 24 reworded; 6 added; 28 removed; 3 previous and 1 current paragraphs rearranged.
Tables are not compared: 8 previous and 6 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 (6)
Current report
Consolidated comparable sales were flat for the three months ended December 31, 2025;
Current report
Sally. The increase in net sales for Sally was primarily driven by the following (in thousands):
Current report
BSG's net sales decrease was primarily from a decrease in comparable sales. The decrease in comparable sales was driven by external factors that impacted stylist purchasing behavior, including the U.S. government shutdown, partially offset by strong performance in our color category. BSG's comparable sales decrease was primarily a result of fewer average number of units per transaction and a decrease in transactions, partially offset by an increase in average unit retail.
Current report
Sally. Sally’s selling, general and administrative expenses increased $6.7 million, or 2.9%, for the three months ended December 31, 2025, and included an unfavorable impact from foreign exchange rates of $3.5 million. As a percentage of Sally net sales, selling, general and administrative expenses for the three months ended December 31, 2025, were 45.2%, compared to 44.4% for the three months ended December 31, 2024. The increase as a percentage of sales was primarily due to increased labor and other compensation-related expenses, higher delivery and commission costs from digital marketplaces, and higher rent and advertising expenses, partially offset by Fuel for Growth benefits.
Current report
Our working capital (current assets less current liabilities) increased $18.0 million, to $743.5 million at December 31, 2025, compared to $725.5 million at September 30, 2025. The increase was primarily driven by the timing of accrued compensation expenses within accrued expenses, timing of accounts payable, an increase in cash and cash equivalents, partially offset by the timing of income taxes payable, lower inventory, and the collection of landlord receivables related to our new corporate headquarters within accounts receivable, other.
Current report
The change in our investing activities was a result of lapping the cash received of $44.0 million from the sale of our corporate headquarters in the prior year and higher capital expenditures in the current year, which includes the build out of our new corporate headquarters.
Removed paragraphs (28)
Previous report
Consolidated comparable sales decreased 0.4% for the three months ended June 30, 2025;
Previous report
SBS. The decrease in net sales for SBS was primarily driven by the following (in thousands):
Previous report
SBS’s net sales decrease was driven primarily by lower comparable sales and the impacts of net store closures over the past 12 months. The decrease in comparable sales was primarily a result of macro uncertainty, which impacted consumer spending, partially offset by strong growth in hair color and digital marketplaces.
Previous report
BSG’s net sales increase was primarily from higher comparable sales resulting from continued momentum from expanded distribution and new brand innovation, partially offset by the impacts of net store closures over the past 12 months.
Previous report
BSG. BSG’s gross profit was relatively flat for the three months ended June 30, 2025, as a result of slightly higher net sales, while gross margin was unchanged. BSG’s gross margin was flat to last year, but included lower distribution and freight costs, offset by lower product margins related to brand mix.
Previous report
SBS. SBS’s selling, general and administrative expenses increased $3.4 million, or 1.5%, for the three months ended June 30, 2025, and included a favorable impact from foreign exchange rates of $4.0 million. As a percentage of SBS net sales, selling, general and administrative expenses for the three months ended June 30, 2025, were 45.1%, compared to 43.6% for the three months ended June 30, 2024. The increase as a percentage of sales was primarily due to deleveraging resulting from lower net sales and an increase in labor and other compensation-related expenses.
Previous report
Unallocated. Unallocated selling, general and administrative expenses, which represent certain corporate costs that have not been charged to our reporting segments, decreased $5.7 million, or 9.3%, for the three months ended June 30, 2025, primarily due to lower costs in connection to our Fuel for Growth initiative and savings generated from this initiative, partially offset by higher information technology costs and an increase in labor and other compensation-related expenses.
Previous report
The decrease in interest expense was driven by a lower outstanding principle balance and interest rate on our Term Loan B, fewer borrowings on our ABL facility, and lower losses on debt extinguishment compared to the prior year.
Previous report
The effective tax rate was 26.8% and 26.1% for the three months ended June 30, 2025 and 2024, respectively. The increase in the effective tax rate was primarily due to the divestiture of Spain operations and the associated net operating losses not utilized.
Previous report
In December of 2021, the Organization for Economic Cooperation and Development (OECD) established a framework, referred to as Pillar 2, designed to ensure large multinational enterprises pay a minimum 15 percent level of tax on the income arising in each jurisdiction in which they operate. The earliest effective date is for taxable years beginning after December 31, 2023, which for us is fiscal year 2025. Numerous jurisdictions in which Sally Beauty operates have enacted the OECD model rules or drafted legislation, including Belgium, Canada, France, Germany, Ireland, Italy, Netherlands, Spain, and the United Kingdom. The United States is not subject to Pillar 2. We do not expect this legislation to have a material impact on our consolidated financial statements. We will continue to monitor and evaluate new legislation and guidance, which could change our current assessment.
Previous report
The Nine Months Ended June 30, 2025, compared to the Nine Months Ended June 30, 2024
Previous report
Net Sales
Previous report
SBS. The decrease in net sales for SBS was primarily driven by the following (in thousands):
Previous report
(a)
Previous report
(a)
Previous report
BSG’s net sales decrease reflects external factors during the fiscal year that impacted stylist purchasing behavior, including weather, an unusually harsh flu season and macro uncertainty, negative impacts from foreign exchange rates, and the impacts of net store closures over the past 12 months, partially offset by continued momentum from expanded distribution and new brand innovation.
Previous report
Gross Profit
Previous report
BSG. BSG’s gross profit was relatively unchanged for the nine months ended June 30, 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, partially offset by lower product margins related to brand mix.
Previous report
Selling, General and Administrative Expenses
Previous report
SBS. SBS’s selling, general and administrative expenses increased $6.2 million, or 0.9%, for the nine months ended June 30, 2025, and included a favorable impact from foreign exchange rates of $8.9 million. As a percentage of SBS net sales, selling, general and administrative expenses for the nine months ended June 30, 2025, were 45.1%, compared to 44.1% for the nine months ended June 30, 2024. The increase as a percentage of sales was primarily due to deleveraging resulting from lower net sales, 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 report
BSG. BSG’s selling, general and administrative expenses decreased $10.5 million, or 3.1%, for the nine months ended June 30, 2025. As a percentage of BSG net sales, selling, general and administrative expenses for the nine months ended June 30, 2025, were 27.6% compared to 28.3% for the nine months ended June 30, 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.
Previous report
Interest Expense
Previous report
The decrease in interest expense was driven by a lower outstanding principle balance and interest rate on our Term Loan B, a lower average outstanding balance on our ABL Facility, and lower losses on debt extinguishment compared to the prior year.
Previous report
Provision for Income Taxes
Previous report
Our working capital (current assets less current liabilities) increased $25.2 million, to $737.8 million at June 30, 2025, compared to $712.6 million at September 30, 2024. The increase was primarily driven by the timing of accounts payable and income taxes payments, partially offset by lower inventory, as a result of a strategic reduction in slower moving products and the negative impacts of foreign exchange rates of $6.1 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.
Previous report
The decrease in cash used by investing activities was primarily the result of receiving $43.6 million from the sale of our corporate headquarters, lower capital expenditures as we lapped technology investments in the prior year, offset by investments in store improvements, and $3.1 million from the divesture of our operations in Spain.
Previous report
U.S. Income Tax Regulations
Previous report
On July 4, 2025, “The One Big Beautiful Bill Act” was signed into law. ASC Topic 740, Income Taxes, requires the effects of changes in tax law or rate to be recognized in the period in which the legislation is enacted. The Company is currently evaluating the enacted legislation and the impact on its financial statements.
Reworded paragraphs (24)
Previous wording
This section discusses management’s view of the financial condition, results of operations and cash flows of Sally Beauty for the periods covered by this Quarterly Report. This section should be read in conjunction with the information contained in our Annual Report on Form 10-K for the fiscal year ended September 30, 2024, including the Risk Factors sections therein, as well as the condensed consolidated interim financial statements and accompanying notes included elsewhere in this Quarterly Report.
Current wording
This section discusses management’s view of the financial condition, results of operations and cash flows of Sally Beauty for the periods covered by this Quarterly Report. This section should be read in conjunction with the information contained in our Annual Report on Form 10-K for the fiscal year ended September 30, 2025, including the Risk Factors sections therein, and information contained elsewhere in this Quarterly Report, including the condensed consolidated interim financial statements and notes to those financial statements.
Previous wording
Consolidated net sales for the three months ended June 30, 2025, decreased $9.0 million, or 1.0%, to $933.3 million, compared to the three months ended June 30, 2024;
Current wording
Consolidated net sales for the three months ended December 31, 2025, increased $5.3 million, or 0.6%, to $943.2 million, compared to the three months ended December 31, 2024. Consolidated net sales included a positive impact from changes in foreign currency exchange rates of $8.5 million;
Previous wording
Consolidated gross profit for the three months ended June 30, 2025, was relatively flat at $481.0 million, compared to the three months ended June 30, 2024. Consolidated gross margin increased 50 bps to 51.5% for the three months ended June 30, 2025, compared to the three months ended June 30, 2024;
Current wording
Consolidated gross profit for the three months ended December 31, 2025, increased $6.4 million, or 1.3%, to $483.3 million, compared to the three months ended December 31, 2024. Consolidated gross margin increased 40 bps to 51.2% for the three months ended December 31, 2025, compared to the three months ended December 31, 2024;
Previous wording
Consolidated operating earnings for the three months ended June 30, 2025, increased $6.4 million, or 8.9%, to $78.2 million, compared to the three months ended June 30, 2024. Operating margin increased 80 bps to 8.4% for the three months ended June 30, 2025, compared to the three months ended June 30, 2024;
Current wording
Consolidated operating earnings for the three months ended December 31, 2025, decreased $24.4 million, or 24.3%, to $75.9 million, compared to the three months ended December 31, 2024. Operating margin decreased 260 bps to 8.1% for the three months ended December 31, 2025, compared to the three months ended December 31, 2024;
Previous wording
For the three months ended June 30, 2025, our consolidated net earnings increased $8.0 million, or 21.2%, to $45.7 million, compared to the three months ended June 30, 2024;
Current wording
For the three months ended December 31, 2025, our consolidated net earnings decreased $15.5 million, or 25.3%, to $45.6 million, compared to the three months ended December 31, 2024;
Previous wording
For the three months ended June 30, 2025, our diluted earnings per share was $0.44 compared to $0.36 for the three months ended June 30, 2024; and
Current wording
For the three months ended December 31, 2025, our diluted earnings per share was $0.45 compared to $0.58 for the three months ended December 31, 2024; and
Previous wording
Cash provided by operations was $69.4 million for the three months ended June 30, 2025, compared to $47.9 million for the three months ended June 30, 2024.
Current wording
Cash provided by operations was $93.2 million for the three months ended December 31, 2025, compared to $33.5 million for the three months ended December 31, 2024.
Previous wording
We consider comparable sales to be an appropriate performance indicator to measure our sales growth compared to the prior period. Our comparable sales metric includes sales from stores that have been operating for 14 months or longer as of the end of the reporting period, as well as sales from e-commerce revenue, sales to franchisees, and full service sales. Our comparable sales metric excludes the impact of foreign exchange rate fluctuations and sales from stores relocated until 14 months after the relocation. Similarly, revenue from acquired stores is excluded from our comparable sales metric until 14 months after the acquisition. Our calculation of comparable sales might not be the same as other retailers as the calculation varies across the retail industry.
Current wording
We believe that comparable sales is an appropriate performance indicator to measure our sales growth compared to the prior period. Our comparable sales include sales from stores that have been operating for 14 months or longer as of the last day of a month and from e-commerce revenue. Additionally, comparable sales include sales to franchisees and full service sales. Our comparable sales excludes the effect of changes in foreign exchange rates and sales from stores relocated until 14 months after the relocation. Revenue from acquired stores is excluded from our comparable sales calculation until 14 months after the acquisition. Our calculation of comparable sales might not be the same as other retailers as the calculation varies across the retail industry.
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 nine months ended June 30, 2025. 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 three months ended December 31, 2024. See Note 7, Property and Equipment, Net, for more information related to the sale of our corporate headquarters.
Previous 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.
Current wording
Sally's net sales increase was primarily driven by positive impacts from foreign exchange rates and a slight increase in comparable sales, partially offset by net stores closed during the past twelve months. The slight 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 the U.S. government shutdown, exiting substantially all of our full service operations across Europe, and softness in our hair care category. Sally’s comparable sales reflect an increase in average unit retail, partially offset by a decrease in transactions.
Previous wording
SBS. SBS’s gross profit increased for the nine months ended June 30, 2025, as a result of a higher gross margin, partially offset by lower net sales. SBS’s gross margin improvement was primarily driven by lower distribution and freight costs and higher product margins, resulting from enhanced promotional strategies and benefits from our Fuel for Growth initiative, partially offset by an inventory write-off in our European operations in connection with our Fuel for Growth initiative.
Current wording
Sally. Sally’s gross profit increased for the three months ended December 31, 2025, as a result of an increase in net sales and a higher gross margin on units sold. Sally’s gross margin improvement was driven primarily by higher product margins, resulting from benefits from our Fuel for Growth initiative.
Previous wording
SBS. SBS’s gross profit was relatively flat for the three months ended June 30, 2025, as a result of lower net sales, partially offset by a higher gross margin. SBS’s gross margin improvement was driven primarily by higher product margins resulting from benefits from our Fuel for Growth initiative, lower distribution and freight costs, and lower shrink expense, partially offset by an inventory write-off in our European operations in connection with our Fuel for Growth initiative.
Current wording
BSG. BSG’s gross profit increased for the three months ended December 31, 2025, as a result of a higher gross margin on units sold, partially offset by a decrease in net sales. BSG’s gross margin improvement was driven by higher product margins, resulting from benefits from our Fuel for Growth initiative.
Previous wording
BSG. BSG’s selling, general and administrative expenses decreased $3.6 million, or 3.2%, for the three months ended June 30, 2025. As a percentage of BSG net sales, selling, general and administrative expenses for the three months ended June 30, 2025, were 26.9% compared to 27.9% for the three months ended June 30, 2024. The decrease as a percentage of sales was primarily due to decreases in depreciation expense and delivery expense.
Current wording
BSG. BSG’s selling, general and administrative expenses decreased $1.7 million, or 1.5%, for the three months ended December 31, 2025. As a percentage of BSG net sales, selling, general and administrative expenses for the three months ended December 31, 2025, were 27.1% compared to 27.4% for the three months ended December 31, 2024. The decrease as a percentage of sales was primarily due to lower labor and other compensation-related expenses.
Previous wording
Unallocated. Unallocated selling, general and administrative expenses, which represent certain corporate costs that have not been charged to our reporting segments, decreased $37.3 million, or 21.3%, for the nine months ended June 30, 2025, primarily due to a $26.6 million gain on the sale of our corporate headquarters and lower costs in connection to our Fuel for Growth initiative, 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, increased $25.8 million, or 86.1%, for the three months ended December 31, 2025, primarily due to a $26.6 million gain on the sale of our corporate headquarters in the prior year.
Previous wording
The effective tax rate was 26.4% and 25.8% for the nine months ended June 30, 2025 and 2024, respectively. The increase in the effective tax rate was primarily due to foreign operations, including the divestiture of Spain operations, and higher federal tax credits in the prior year.
Current wording
The effective tax rates were 25.7% and 26.4% for the three months ended December 31, 2025 and 2024, respectively. The decrease in the effective tax rate was primarily due to the tax impact of share-based compensation which was beneficial in the current quarter, but detrimental in the prior year quarter, and a foreign loss in the prior year quarter for which a tax benefit was not recognized, offset by higher federal tax credits in the prior year quarter.
Previous wording
Our principal sources of liquidity are cash from operations, cash and cash equivalents, and borrowings under our ABL Facility. We utilize these resources primarily to fund our operating costs, working capital requirements, capital expenditures, and scheduled debt service obligations, including interest and principal payments. Additionally, under our share repurchase program (see below for more details) we may repurchase shares of our common stock on the open market to return value to our shareholders. At June 30, 2025, we had $595.3 million of available liquidity, which includes $482.5 million available for borrowing under our ABL Facility and cash and cash equivalents of $112.8 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 December 31, 2025, we had $639.6 million of available liquidity, which includes $482.4 million available for borrowing under our ABL facility and cash and cash equivalents of $157.2 million.
Previous wording
The increase in cash provided by operating activities was primarily driven by lower inventory purchases and lower interest paid on our debt, partially offset by the timing of accounts payable and income tax payments, and lower cash receipts from customers.
Current wording
The increase in cash provided by operating activities was primarily driven by the timing of accounts payable, lower income taxes paid, and the receipt of landlord receivables related to our new corporate headquarters.
Previous wording
Net Cash Used by Investing Activities
Current wording
Net Cash (Used) Provided by Investing Activities
Previous 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.
Current wording
The decrease in cash used by financing activities was primarily driven by lower debt repayments in the current year, partially offset by higher share repurchases under our share repurchase program.
Previous wording
At June 30, 2025, we had $896.0 million in outstanding debt principal, excluding unamortized debt issuance costs and debt discounts, in the aggregate, of $9.6 million. Our debt consists of $600.0 million in 2032 Senior Notes outstanding, and $296.0 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.
Current wording
At December 31, 2025, we had $855.0 million in outstanding debt principal, excluding unamortized debt issuance costs and debt discounts, in the aggregate, of $8.5 million. Our debt consists of $600.0 million in 2032 Senior Notes outstanding, and $255.0 million remaining on our Term Loan B. There were no outstanding borrowings under our ABL facility.
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 nine months ended June 30, 2025, the weighted average interest rate on our borrowings under the ABL Facility was 7.4%.
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 three months ended December 31, 2025, there were no borrowings under the ABL facility.
Previous wording
The following table presents the summarized statement of earnings information for the Issuers and the Guarantors for the nine months ended June 30, 2025 (in thousands):
Current wording
The following table presents the summarized statement of earnings information for the Issuers and the Guarantors for the three months ended December 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 in compliance with all SEC rules, including Rule 10b-18, and other legal requirements, and may be made in part under Rule 10b5-1 plans, which permit stock repurchases when the Company might otherwise be precluded from doing so. During the nine months ended June 30, 2025 and 2024, we repurchased 3.3 million shares and 4.3 million shares of our common stock for $33.0 million and $50.0 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 three months ended December 31, 2025 and 2024, we repurchased 1.4 million shares and 0.8 million shares of our common stock for $20.7 million and $10.0 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 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.
Current wording
There have been no material changes to our critical accounting estimates or assumptions since September 30, 2025.
Rearranged current paragraphs (1)
Current report — wording carried from elsewhere
The decrease in interest expense was primarily a result of a lower average outstanding principal balance on our Term Loan B. See Note 10, Short-term and Long-term Debt, in Item 1 of this quarterly report for more information on our debt.
Rearranged previous paragraphs (3)
Previous report — wording carried elsewhere
BSG. The increase in net sales for BSG was primarily driven by the following (in thousands):
Previous report — wording carried elsewhere
Includes closed stores, net of stores opened for less than 14 months.
Previous report — wording carried elsewhere
Includes closed stores, net of stores opened for less than 14 months and sales from acquired stores.