Core Insights - Sally Beauty Holdings, Inc. (SBH) is focusing on strategic priorities such as customer engagement, high-margin owned brands, and innovation to enhance its market position as a leading beauty retailer [1][10] - The company is undergoing a brand refresh to transition from a beauty supply house to a modern specialty beauty retailer, unifying its brand messaging around hair to attract a broader customer base [2][10] Customer Experience and Operational Strategy - Sally Beauty is prioritizing the customer journey and operational excellence to create a seamless in-store experience, with the Happy Beauty concept aimed at delivering value-driven beauty experiences [3][10] - The company is seeing positive trends in its Happy Beauty stores, particularly in mall locations, and is focusing on indie beauty brands and trending categories like Korean beauty and fragrances [4][10] Financial Performance and Growth Projections - SBH's shares have increased by 38.8% year-to-date, outperforming the industry average growth of 10.4% [6] - The company trades at a forward price-to-earnings ratio of 7.28X, significantly lower than the industry average of 18.95X [7] - The Zacks Consensus Estimate indicates year-over-year earnings per share (EPS) growth of 8.9% for fiscal 2025 and 9.1% for fiscal 2026, with recent estimates trending upward [8][11]

Group 1: Company Performance - Sterling Infrastructure, Inc. (STRL) has seen its shares gain 41% over the last three months, significantly outperforming the S&P 500's advance of 8% [2] - TAT Technologies Ltd. (TATT) experienced a share price increase of 27.6% over the last three months, also surpassing the S&P 500's 8% gain [3] - Sally Beauty Holdings, Inc. (SBH) achieved a remarkable 62.7% increase in share price over the last three months, again outperforming the S&P 500's 8% rise [4] Group 2: Earnings Estimates - Sterling Infrastructure's current year earnings estimate has increased by 10.9% over the last 60 days [1] - TAT Technologies has also seen a 10.9% increase in its current year earnings estimate over the last 60 days [2] - Sally Beauty's current year earnings estimate has risen by 5.1% over the last 60 days [3]

Core Viewpoint - The article emphasizes the importance of value investing and highlights Sally Beauty (SBH) as a strong value stock currently being undervalued by the market [2][4][6] Company Analysis - Sally Beauty (SBH) has a Zacks Rank of 2 (Buy) and an A grade for Value, indicating strong potential for value investors [4] - The stock is trading at a P/E ratio of 7.02, significantly lower than the industry average of 19.38, suggesting it is undervalued [4] - SBH's Forward P/E has fluctuated between 4.04 and 8.12 over the past year, with a median of 5.53, further indicating its valuation dynamics [4] - The P/S ratio for SBH is 0.36, compared to the industry's average P/S of 0.85, reinforcing the notion of undervaluation [5] Investment Outlook - The combination of SBH's low P/E and P/S ratios, along with a strong earnings outlook, positions it as an attractive value stock in the current market [6]

Core Viewpoint - Momentum investing focuses on "buying high and selling higher" rather than the traditional "buying low and selling high" approach, aiming for quicker profits [1] Group 1: Momentum Investing Characteristics - Momentum investing can be risky as stocks may lose momentum if their valuations exceed future growth potential, leading to potential losses for investors [2] - A safer approach may involve investing in bargain stocks that have recently shown price momentum, utilizing tools like the Zacks Momentum Style Score to identify such opportunities [3] Group 2: Case Study - Sally Beauty (SBH) - Sally Beauty (SBH) has shown a significant price increase of 30.9% over the past four weeks, indicating growing investor interest [4] - Over the past 12 weeks, SBH's stock gained 55.8%, with a beta of 1.3, suggesting it moves 30% more than the market [5] - SBH has a Momentum Score of B, indicating a favorable time to invest based on its momentum [6] Group 3: Earnings Estimates and Valuation - SBH has received upward revisions in earnings estimates, earning a Zacks Rank 2 (Buy), which is associated with strong momentum effects [7] - The stock is currently trading at a Price-to-Sales ratio of 0.36, suggesting it is undervalued at 36 cents for each dollar of sales [7] Group 4: Additional Opportunities - Besides SBH, there are other stocks that meet the criteria of the 'Fast-Paced Momentum at a Bargain' screen, presenting further investment opportunities [8] - Investors can explore over 45 Zacks Premium Screens tailored to different investing styles to identify potential winning stocks [9]

Core Viewpoint - Sally Beauty Holdings, Inc. (SBH) has reached a significant support level and is showing potential for a bullish breakout due to a "golden cross" formation in its moving averages [1][2]. Technical Analysis - A golden cross occurs when a short-term moving average, such as the 50-day, crosses above a long-term moving average, like the 200-day, indicating a potential bullish trend [2]. - The formation of a golden cross involves three stages: a downtrend followed by a bottoming out, the crossover of moving averages, and finally, an upward price movement [3]. Performance Metrics - SBH shares have increased by 42.1% over the past four weeks, indicating strong upward momentum [4]. - The company currently holds a 2 (Buy) rating on the Zacks Rank, suggesting a favorable outlook for potential breakout [4]. - Earnings expectations for SBH have improved, with three upward revisions and no downward changes in the last 60 days, leading to an increase in the Zacks Consensus Estimate [4]. Investment Consideration - Given the technical indicators and positive earnings revisions, SBH is recommended for inclusion on investors' watchlists [5].

Core Insights - Sally Beauty Holdings, Inc.'s digital channel is becoming a significant revenue driver, with global e-commerce sales reaching $99 million in Q3 of fiscal 2025, accounting for 10.6% of net sales, an increase from 9.7% year-over-year despite a 1% decline in overall sales [1][9] E-Commerce Performance - Sally Beauty Supply generated $43 million in e-commerce sales, representing 8.2% of segment revenues, while Beauty Systems Group achieved $56 million, or 13.7% of its revenues, indicating a positive trend in marketplace activity and direct site traffic [2] Growth Drivers - Growth is supported by strategic digital initiatives such as marketplace integration, enhanced fulfillment capabilities, and the Licensed Colorist OnDemand service, which promotes online engagement and increases basket size [3][5] - Targeted promotions and product innovation are attracting first-time customers to the e-commerce platform [3] Market Challenges - Sustaining growth may face challenges as consumers remain value-focused, leading to selective trade-down in certain categories; however, marketplace expansion and personalized experiences are expected to help e-commerce capture a larger share of total sales [4] Future Outlook - Continued investment in customer engagement and operational efficiency positions Sally Beauty's digital channel to drive growth in traffic, conversion rates, and market share [5]

Core Insights - The focus is on identifying strong stocks using the Zacks Rank system, which emphasizes earnings estimates and revisions [1] - Value investing remains a popular strategy, utilizing various valuation metrics to identify undervalued stocks [1] Company Analysis: Sally Beauty (SBH) - Sally Beauty currently holds a Zacks Rank of 2 (Buy) and an A grade for Value, indicating strong potential [3] - The stock has a P/E ratio of 6.4, significantly lower than the industry average of 18.81, suggesting it may be undervalued [3] - The Forward P/E ratio for SBH has fluctuated between 4.04 and 8.12 over the past year, with a median of 5.51 [3] - The P/S ratio for SBH is 0.31, compared to the industry average of 0.81, further indicating potential undervaluation [4] - Overall, the combination of these metrics suggests that SBH is likely undervalued and presents an impressive value opportunity at this time [5]

Core Viewpoint - Momentum investing focuses on "buying high and selling higher" rather than traditional strategies of "buying low and selling high" [1] Group 1: Momentum Investing Strategy - Momentum investors often face challenges in determining the right entry point, as stocks may lose momentum when their valuations exceed future growth potential [2] - Investing in bargain stocks that have recently shown price momentum can be a safer strategy [3] Group 2: Sally Beauty (SBH) Analysis - Sally Beauty (SBH) has seen a price increase of 17.4% over the past four weeks, indicating growing investor interest [4] - Over the past 12 weeks, SBH's stock gained 29.2%, with a beta of 1.3, suggesting it moves 30% higher than the market [5] - SBH has a Momentum Score of B, indicating a favorable time to invest [6] - The stock has a Zacks Rank 2 (Buy) due to upward revisions in earnings estimates, which attract more investors [7] - SBH is trading at a Price-to-Sales ratio of 0.31, suggesting it is undervalued at 31 cents for each dollar of sales [7] Group 3: Additional Investment Opportunities - Besides SBH, there are other stocks that meet the criteria of the 'Fast-Paced Momentum at a Bargain' screen, presenting further investment opportunities [8] - Zacks offers over 45 Premium Screens tailored to different investing styles to help identify winning stock picks [9]

Group 1 - The core focus of Quad 7 Capital is to provide investment opportunities through their BAD BEAT Investing platform, emphasizing both long and short trades [1] - The team consists of 7 analysts with diverse expertise in business, policy, economics, mathematics, game theory, and sciences, aiming to educate investors on proficient trading [1] - Since May 2020, the company has maintained an average position of 95% long and 5% short, showcasing a strategic approach to market conditions [1] Group 2 - BAD BEAT Investing offers various benefits, including weekly well-researched trade ideas, access to multiple chat rooms, and daily summaries of key analyst upgrades and downgrades [2] - The platform also provides education on basic options trading and extensive trading tools to enhance investor knowledge and skills [2]

[PART I — FINANCIAL INFORMATION](index=4&type=section&id=PART%20I%20%E2%80%94%20FINANCIAL%20INFORMATION) [Item 1. Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited condensed consolidated financial statements, including balance sheets, earnings, comprehensive income, equity, and cash flows, with detailed accounting notes [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) This section provides a snapshot of the company's financial position, detailing assets, liabilities, and stockholders' equity Condensed Consolidated Balance Sheets (In thousands) | (In thousands) | June 30, 2025 (Unaudited) | September 30, 2024 | | :------------------------- | :------------------------ | :------------------- | | **Assets** | | | | Cash and cash equivalents | $112,800 | $107,961 | | Total current assets | $1,261,644 | $1,305,314 | | Total assets | $2,744,100 | $2,792,899 | | **Liabilities** | | | | Total current liabilities | $523,842 | $592,669 | | Long-term debt | $882,383 | $978,255 | | Total liabilities | $1,981,191 | $2,164,364 | | **Stockholders' Equity** | | | | Total stockholders' equity | $762,909 | $628,535 | [Condensed Consolidated Statements of Earnings](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Earnings) This section presents the company's financial performance over specific periods, detailing net sales, profit, and earnings per share Condensed Consolidated Statements of Earnings (In thousands, except per share data) | (In thousands, except per share data) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Nine Months Ended June 30, 2025 | Nine Months Ended June 30, 2024 | | :------------------------------------ | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | Net sales | $933,307 | $942,340 | $2,754,348 | $2,782,003 | | Gross profit | $480,985 | $480,883 | $1,416,642 | $1,411,131 | | Operating earnings | $78,173 | $71,770 | $247,866 | $200,467 | | Net earnings | $45,724 | $37,724 | $145,947 | $105,358 | | Basic EPS | $0.46 | $0.37 | $1.44 | $1.01 | | Diluted EPS | $0.44 | $0.36 | $1.40 | $0.98 | [Condensed Consolidated Statements of Comprehensive Income](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income) This section details the company's total comprehensive income, including net earnings and other comprehensive income (loss) Condensed Consolidated Statements of Comprehensive Income (In thousands) | (In thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Nine Months Ended June 30, 2025 | Nine Months Ended June 30, 2024 | | :------------- | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | Net earnings | $45,724 | $37,724 | $145,947 | $105,358 | | Other comprehensive income (loss), net of tax | $26,011 | $(5,022) | $11,833 | $910 | | Total comprehensive income | $71,735 | $32,702 | $157,780 | $106,268 | [Condensed Consolidated Statements of Stockholders' Equity](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders'%20Equity) This section outlines changes in the company's equity, including common stock, accumulated earnings, and comprehensive loss Condensed Consolidated Statements of Stockholders' Equity (In thousands) | (In thousands) | Balance at September 30, 2024 | Balance at June 30, 2025 | | :------------- | :---------------------------- | :----------------------- | | Common Stock | $1,019 | $994 | | Accumulated Earnings | $740,685 | $863,251 | | Accumulated Other Comprehensive Loss | $(113,169) | $(101,336) | | Total Stockholders' Equity | $628,535 | $762,909 | [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This section details the company's cash inflows and outflows from operating, investing, and financing activities Condensed Consolidated Statements of Cash Flows (In thousands) | (In thousands) | Nine Months Ended June 30, 2025 | Nine Months Ended June 30, 2024 | | :------------------------------------ | :------------------------------ | :------------------------------ | | Net cash provided by operating activities | $153,952 | $135,855 | | Net cash used by investing activities | $(12,940) | $(64,026) | | Net cash used by financing activities | $(137,863) | $(97,835) | | Net increase (decrease) in cash and cash equivalents | $4,839 | $(25,626) | | Cash and cash equivalents, end of period | $112,800 | $97,375 | [Notes to Condensed Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) This section provides detailed explanations and disclosures supporting the condensed consolidated financial statements [1. Significant Accounting Policies](index=9&type=section&id=1.%20Significant%20Accounting%20Policies) This section details the basis of presentation for interim financial statements, adhering to GAAP, SEC rules, and consolidation principles - The interim financial statements are prepared in accordance with GAAP and SEC rules, condensing information normally found in annual statements[24](index=24&type=chunk) - All accounts of Sally Beauty Holdings, Inc. and its wholly-owned subsidiaries are consolidated, with intercompany balances eliminated[25](index=25&type=chunk) - Significant estimates are involved in areas such as sales allowances, deferred revenue, inventory valuation, amortization, depreciation, intangible assets, goodwill, and other reserves[27](index=27&type=chunk) [2. Recent Accounting Pronouncements](index=9&type=section&id=2.%20Recent%20Accounting%20Pronouncements) This section details recent FASB ASUs on segment reporting, income tax, and expense disaggregation, with no material impact expected on financials - ASU No. 2023-07 (Segment Reporting) is effective for fiscal years beginning after December 15, 2023, and is not expected to materially impact consolidated financial statements, but will require additional disclosures[28](index=28&type=chunk) - ASU No. 2023-09 (Income Taxes) is effective for annual periods beginning after December 15, 2024, and is not expected to impact consolidated results or financial position[29](index=29&type=chunk) - ASU 2024-03 (Expense Disaggregation Disclosures) is effective for fiscal years beginning after December 15, 2026, and the company is evaluating its impact, not currently expecting early adoption[30](index=30&type=chunk)[31](index=31&type=chunk) [3. Revenue Recognition](index=11&type=section&id=3.%20Revenue%20Recognition) Revenue is recognized from merchandise sales upon transfer of control, with contract liabilities from loyalty points and gift cards decreasing from **$11.493 million** to **$10.694 million** - Revenue is recognized from merchandise sales at the point-of-sale or shipment for e-commerce, net of estimated sales returns and taxes, when control transfers to the customer[32](index=32&type=chunk) Contract Liabilities (In thousands) | (in thousands) | Nine Months Ended June 30, 2025 | Nine Months Ended June 30, 2024 | | :------------- | :------------------------------ | :------------------------------ | | Beginning Balance (Contract Liabilities) | $11,493 | $14,038 | | Loyalty points and gift cards issued, net of estimated breakage | $5,904 | $9,266 | | Revenue recognized from beginning liability | $(6,703) | $(11,252) | | Ending Balance (Contract Liabilities) | $10,694 | $12,052 | [4. Fair Value Measurements](index=11&type=section&id=4.%20Fair%20Value%20Measurements) Fair value of financial instruments is measured using a three-level hierarchy, with total assets at **$812 thousand** and liabilities at **$1,957 thousand** - Fair value is defined as the exit price in an orderly transaction, using a three-level hierarchy based on input observability[34](index=34&type=chunk)[35](index=35&type=chunk) Fair Value of Financial Instruments (In thousands) | (in thousands) | June 30, 2025 | September 30, 2024 | | :------------- | :------------ | :----------------- | | **Financial Assets:** | | | | Foreign exchange contracts (Level 2) | $501 | $1,207 | | Interest rate swap (Level 2) | $311 | $0 | | Total assets | $812 | $1,207 | | **Financial Liabilities:** | | | | Foreign exchange contracts (Level 2) | $1,957 | $1,485 | | Interest rate swap (Level 2) | $0 | $635 | | Total liabilities | $1,957 | $2,120 | Fair Value of Long-Term Debt (In thousands) | (in thousands) | June 30, 2025 Carrying Value | June 30, 2025 Fair Value | September 30, 2024 Carrying Value | September 30, 2024 Fair Value | | :------------- | :--------------------------- | :----------------------- | :-------------------------------- | :---------------------------- | | 2032 Senior Notes (Level 2) | $600,000 | $614,250 | $600,000 | $615,000 | | Term Loan B (Level 2) | $296,000 | $295,260 | $394,000 | $393,508 | | Total long-term debt | $896,000 | $909,510 | $994,000 | $1,008,508 | [5. Stockholders' Equity](index=13&type=section&id=5.%20Stockholders'%20Equity) The share repurchase program was extended with **$487.8 million** remaining, and AOCL decreased due to foreign currency translation - The share repurchase program was extended to September 30, 2029, with **$487.8 million** remaining authorization as of June 30, 2025[38](index=38&type=chunk) Share Repurchases (In millions, excluding excise taxes) | Share Repurchases (excluding excise taxes) | Three Months Ended June 30, 2025 | Nine Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Nine Months Ended June 30, 2024 | | :----------------------------------------- | :------------------------------- | :------------------------------ | :------------------------------- | :------------------------------ | | Shares repurchased (millions) | 1.5 | 3.3 | 0.9 | 4.3 | | Total cost (millions) | $13.0 | $33.0 | $10.0 | $50.0 | Accumulated Other Comprehensive Loss (In thousands) | (in thousands) | Balance at September 30, 2024 | Balance at June 30, 2025 | | :------------- | :---------------------------- | :----------------------- | | Accumulated Other Comprehensive Loss | $(113,169) | $(101,336) | | Change due to Other comprehensive income (loss) before reclassification, net of tax | N/A | $13,217 | | Change due to Reclassification to net earnings, net of tax | N/A | $(1,384) | [6. Weighted-Average Shares](index=14&type=section&id=6.%20Weighted-Average%20Shares) This section reconciles basic and diluted weighted-average shares outstanding, showing **100.463 million** basic and **103.239 million** diluted shares for Q3 2025 Weighted-Average Shares (In thousands) | (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Nine Months Ended June 30, 2025 | Nine Months Ended June 30, 2024 | | :------------- | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | Weighted-average basic shares | 100,463 | 103,190 | 101,367 | 104,477 | | Dilutive securities (stock option and award programs) | 2,776 | 2,707 | 2,820 | 2,709 | | Weighted-average diluted shares | 103,239 | 105,897 | 104,187 | 107,186 | | Anti-dilutive options excluded | 1,840 | 1,678 | 1,499 | 1,678 | [7. Property and Equipment, Net and Divesture of Subsidiary](index=14&type=section&id=7.%20Property%20and%20Equipment,%20Net%20and%20Divesture%20of%20Subsidiary) The company sold its corporate headquarters for **$45.5 million** and divested Pro-Duo Spain SL for **$3.2 million**, recognizing gains - Sold corporate headquarters for **$45.5 million**, recognizing a **$26.6 million** gain, and entered a 12-month leaseback[42](index=42&type=chunk) - Divested Pro-Duo Spain SL (19 stores) for **$3.2 million**, recognizing a **$0.8 million** gain, with no material impact expected on consolidated financials[43](index=43&type=chunk) [8. Goodwill and Intangible Assets](index=14&type=section&id=8.%20Goodwill%20and%20Intangible%20Assets) Annual impairment assessments found no goodwill impairment, but a **$1.8 million** trade name impairment loss was recognized in the SBS segment - No goodwill impairment was identified during the annual assessment, but a **$1.8 million** impairment loss was recognized for a trade name in the SBS segment[44](index=44&type=chunk) Goodwill Allocation (In thousands) | (in thousands) | June 30, 2025 | | :------------- | :------------ | | Goodwill (SBS) | $91,100 | | Goodwill (BSG) | $449,800 | Intangible Assets Amortization Expense (In thousands) | (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Nine Months Ended June 30, 2025 | Nine Months Ended June 30, 2024 | | :------------- | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | Intangible assets amortization expense | $851 | $764 | $2,550 | $2,415 | [9. Accrued Liabilities](index=15&type=section&id=9.%20Accrued%20Liabilities) Accrued liabilities increased to **$165.291 million**, primarily driven by compensation (**$61.481 million**), deferred revenue, and interest payable Accrued Liabilities (In thousands) | (in thousands) | June 30, 2025 | September 30, 2024 | | :------------- | :------------ | :----------------- | | Compensation and benefits | $61,481 | $76,649 | | Deferred revenue | $15,829 | $16,080 | | Interest payable | $14,034 | $4,108 | | Accrued freight | $11,064 | $8,240 | | Rental obligations | $10,676 | $11,039 | | Insurance reserves | $8,084 | $7,526 | | Operating accruals and other | $44,123 | $39,308 | | Total accrued liabilities | $165,291 | $162,950 | [10. Short-term and Long-term Debt](index=15&type=section&id=10.%20Short-term%20and%20Long-term%20Debt) ABL Facility maturity extended to 2029 with **$482.5 million** available, and **$95.0 million** of Term Loan B principal was repaid - ABL Facility maturity extended to December 11, 2029; **$482.5 million** available for borrowing with no outstanding borrowings at June 30, 2025[48](index=48&type=chunk) - Voluntarily repaid **$95.0 million** of Term Loan B principal during the nine months ended June 30, 2025, resulting in a **$0.9 million** loss on debt extinguishment[49](index=49&type=chunk) [11. Derivative Instruments and Hedging Activities](index=15&type=section&id=11.%20Derivative%20Instruments%20and%20Hedging%20Activities) The company uses foreign currency forwards and an interest rate swap for hedging, expecting reclassification of net losses/gains to COGS and interest expense - The company uses foreign currency forwards to hedge forecasted inventory purchases, expecting to reclassify approximately **$0.4 million** of net losses from AOCL into COGS over the next 12 months[51](index=51&type=chunk) - An interest rate swap hedges Term Loan B exposure, with expected net gains of **$0.3 million** to be reclassified from AOCL into interest expense over the next 12 months[52](index=52&type=chunk)[53](index=53&type=chunk) - Non-designated foreign exchange forward contracts for intercompany balances resulted in net losses of **$1.3 million** for the three months ended June 30, 2025, and **$0.3 million** for the nine months ended June 30, 2025[54](index=54&type=chunk) [12. Segment Reporting](index=16&type=section&id=12.%20Segment%20Reporting) The company operates in SBS and BSG segments; SBS net sales decreased by **1.8%**, while BSG net sales increased by **0.2%** for the quarter Segment Net Sales and Operating Earnings (In thousands) | (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Nine Months Ended June 30, 2025 | Nine Months Ended June 30, 2024 | | :------------- | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | **Net sales:** | | | | | | SBS | $526,782 | $536,536 | $1,552,803 | $1,573,015 | | BSG | $406,525 | $405,804 | $1,201,545 | $1,208,988 | | Total | $933,307 | $942,340 | $2,754,348 | $2,782,003 | | **Segment operating earnings:** | | | | | | SBS | $83,305 | $86,938 | $240,484 | $241,387 | | BSG | $50,672 | $46,753 | $145,075 | $134,395 | | Total | $133,977 | $133,691 | $385,559 | $375,782 | SBS Merchandise Category Sales Mix | SBS Merchandise Category | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Nine Months Ended June 30, 2025 | Nine Months Ended June 30, 2024 | | :----------------------- | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | Hair color | 42.9% | 40.6% | 41.9% | 39.7% | | Hair care | 23.0% | 24.2% | 23.5% | 24.5% | | Styling tools and supplies | 16.2% | 16.2% | 16.9% | 17.1% | | Nail | 10.2% | 10.5% | 10.0% | 10.2% | | Skin and cosmetics | 7.5% | 8.1% | 7.5% | 8.0% | | Other beauty items | 0.2% | 0.4% | 0.2% | 0.5% | | Total | 100.0% | 100.0% | 100.0% | 100.0% | SBS Sales Channels Mix | SBS Sales Channels | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Nine Months Ended June 30, 2025 | Nine Months Ended June 30, 2024 | | :----------------- | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | Company-operated stores | 91.8% | 93.0% | 91.9% | 93.2% | | E-commerce | 8.2% | 7.0% | 8.1% | 6.8% | | Total | 100.0% | 100.0% | 100.0% | 100.0% | [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=19&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses financial performance, condition, and cash flows, highlighting key metrics, segment results, and liquidity [Financial Summary for the Three Months Ended June 30, 2025](index=19&type=section&id=Financial%20Summary%20for%20the%20Three%20Months%20Ended%20June%2030,%202025) This section summarizes key financial performance metrics for the three months ended June 30, 2025 - Consolidated net sales decreased **1.0%** to **$933.3 million**[62](index=62&type=chunk) - Consolidated comparable sales decreased **0.4%**[62](index=62&type=chunk) - Consolidated gross profit was flat at **$481.0 million**, with gross margin increasing **50 bps** to **51.5%**[62](index=62&type=chunk) - Consolidated operating earnings increased **8.9%** to **$78.2 million**, with operating margin increasing **80 bps** to **8.4%**[62](index=62&type=chunk) - Consolidated net earnings increased **21.2%** to **$45.7 million**[62](index=62&type=chunk) - Diluted EPS was **$0.44**, up from **$0.36**[62](index=62&type=chunk) - Cash provided by operations was **$69.4 million**, up from **$47.9 million**[62](index=62&type=chunk) [Overview (Key Operating Metrics)](index=20&type=section&id=Overview%20(Key%20Operating%20Metrics)) This section provides a comprehensive overview of key operating metrics for both the three and nine months ended June 30, 2025 Key Operating Metrics (Dollars in thousands) | Key Operating Metrics (dollars in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Increase (Decrease) | Nine Months Ended June 30, 2025 | Nine Months Ended June 30, 2024 | Increase (Decrease) | | :----------------------------------------- | :------------------------------- | :------------------------------- | :------------------ | :------------------------------ | :------------------------------ | :------------------ | | **Net sales:** | | | | | | | | SBS | $526,782 | $536,536 | $(9,754) (1.8%) | $1,552,803 | $1,573,015 | $(20,212) (1.3%) | | BSG | $406,525 | $405,804 | $721 (0.2%) | $1,201,545 | $1,208,988 | $(7,443) (0.6%) | | Consolidated | $933,307 | $942,340 | $(9,033) (1.0%) | $2,754,348 | $2,782,003 | $(27,655) (1.0%) | | **Gross profit:** | | | | | | | | SBS | $320,866 | $321,051 | $(185) (0.1%) | $940,519 | $935,189 | $5,330 (0.6%) | | BSG | $160,119 | $159,832 | $287 (0.2%) | $476,123 | $475,942 | $181 (0.0%) | | Consolidated | $480,985 | $480,883 | $102 (0.0%) | $1,416,642 | $1,411,131 | $5,511 (0.4%) | | **Segment gross margin:** | | | | | | | | SBS | 60.9% | 59.8% | 110 bps | 60.6% | 59.5% | 110 bps |\ | BSG | 39.4% | 39.4% | — bps | 39.6% | 39.4% | 20 bps | | Consolidated | 51.5% | 51.0% | 50 bps | 51.4% | 50.7% | 70 bps | | **Consolidated operating earnings** | $78,173 | $71,770 | $6,403 (8.9%) | $247,866 | $200,467 | $47,399 (23.6%) | | **Net earnings** | $45,724 | $37,724 | $8,000 (21.2%) | $145,947 | $105,358 | $40,589 (38.5%) | | **Comparable sales growth (decline):** | | | | | | | | SBS | (1.1)% | 0.7% | (180) bps | 0.1% | (1.7)% | 180 bps | | BSG | 0.5% | 2.6% | (210) bps | (0.2)% | 1.8% | (200) bps | | Consolidated | (0.4)% | 1.5% | (190) bps | — | (0.2)% | 20 bps | | **Number of stores at end-of-period:** | | | | | | | | SBS | 3,096 | 3,128 | (32) (1.0%) | | | | | BSG | 1,329 | 1,332 | (3) (0.2%) | | | | | Consolidated | 4,425 | 4,460 | (35) (0.8%) | | | | [Results of Operations](index=21&type=section&id=Results%20of%20Operations) This section compares operational results for the three and nine months, analyzing changes in sales, profit, expenses, and taxes across segments [The Three Months Ended June 30, 2025, compared to the Three Months Ended June 30, 2024](index=21&type=section&id=The%20Three%20Months%20Ended%20June%2030,%202025,%20compared%20to%20the%20Three%20Months%20Ended%20June%2030,%202024) SBS net sales decreased by **$9.754 million** while BSG net sales increased by **$0.721 million**, with improved SBS gross margin and lower interest expense - SBS net sales decreased by **$9.754 million**, primarily due to a **1.1%** decline in comparable sales and net store closures, partially offset by foreign currency exchange[65](index=65&type=chunk)[66](index=66&type=chunk) - BSG net sales increased by **$0.721 million**, driven by a **0.5%** increase in comparable sales from expanded distribution and new brand innovation, partially offset by net store closures and foreign currency[66](index=66&type=chunk)[67](index=67&type=chunk) - SBS gross margin improved due to higher product margins from Fuel for Growth, lower distribution/freight costs, and lower shrink, partially offset by an inventory write-off[68](index=68&type=chunk) - BSG gross margin was flat, with lower distribution/freight costs offset by lower product margins from brand mix[69](index=69&type=chunk) - Unallocated SG&A expenses decreased by **$5.7 million**, or **9.3%**, primarily due to lower Fuel for Growth costs and savings, partially offset by higher IT and labor expenses[72](index=72&type=chunk) - Interest expense decreased due to a lower outstanding principal balance and interest rate on Term Loan B, fewer ABL facility borrowings, and lower debt extinguishment losses[73](index=73&type=chunk) - The effective tax rate increased to **26.8%** from **26.1%**, mainly due to the divestiture of Spain operations and associated unutilized net operating losses[74](index=74&type=chunk) [The Nine Months Ended June 30, 2025, compared to the Nine Months Ended June 30, 2024](index=22&type=section&id=The%20Nine%20Months%20Ended%20June%2030,%202025,%20compared%20to%20the%20Nine%20Months%20Ended%20June%2030,%202024) SBS net sales decreased by **$20.212 million** and BSG net sales by **$7.443 million**, with gross margin improvements and lower unallocated SG&A - SBS net sales decreased by **$20.212 million**, primarily due to negative foreign exchange rates and net store closures, partially offset by a **0.1%** increase in comparable sales[76](index=76&type=chunk)[77](index=77&type=chunk) - BSG net sales decreased by **$7.443 million**, reflecting negative comparable sales, foreign exchange impacts, and net store closures, partially offset by expanded distribution and new brand innovation[78](index=78&type=chunk)[79](index=79&type=chunk) - SBS gross margin improved due to lower distribution/freight costs and higher product margins from promotional strategies and Fuel for Growth, partially offset by an inventory write-off[80](index=80&type=chunk) - BSG gross margin improved due to lower distribution/freight costs from supply chain efficiencies, partially offset by lower product margins related to brand mix[81](index=81&type=chunk) - Unallocated SG&A expenses decreased by **$37.3 million**, or **21.3%**, primarily due to a **$26.6 million** gain on the sale of corporate headquarters and lower Fuel for Growth costs[85](index=85&type=chunk) - The effective tax rate increased to **26.4%** from **25.8%**, mainly due to foreign operations, including the Spain divestiture, and higher federal tax credits in the prior year[87](index=87&type=chunk) [Liquidity and Capital Resources](index=24&type=section&id=Liquidity%20and%20Capital%20Resources) Liquidity is driven by cash from operations and the ABL Facility, with **$595.3 million** available and **$896.0 million** in outstanding debt [Overview](index=24&type=section&id=Overview) Primary liquidity sources are cash from operations and the ABL Facility, with **$595.3 million** available and increased working capital - Principal liquidity sources are cash from operations, cash and cash equivalents, and the ABL Facility[88](index=88&type=chunk) - As of June 30, 2025, available liquidity was **$595.3 million**, including **$482.5 million** from the ABL Facility and **$112.8 million** in cash and cash equivalents[88](index=88&type=chunk) - Working capital increased by **$25.2 million** to **$737.8 million** at June 30, 2025, primarily due to timing of accounts payable and income tax payments, partially offset by lower inventory[89](index=89&type=chunk) [Cash Flows](index=24&type=section&id=Cash%20Flows) Operating cash flow increased to **$153.952 million**, investing cash flow decreased, and financing cash flow increased due to debt paydown Cash Flow Summary (In thousands) | (in thousands) | Nine Months Ended June 30, 2025 | Nine Months Ended June 30, 2024 | | :------------- | :------------------------------ | :------------------------------ | | Net cash provided by operating activities | $153,952 | $135,855 | | Net cash used by investing activities | $(12,940) | $(64,026) | | Net cash used by financing activities | $(137,863) | $(97,835) | - Increase in cash from operating activities was driven by lower inventory purchases and lower interest paid, partially offset by timing of accounts payable and income tax payments[92](index=92&type=chunk) - Decrease in cash used by investing activities was due to **$43.6 million** from corporate headquarters sale, lower capital expenditures, and **$3.1 million** from Spain operations divestiture[93](index=93&type=chunk) - Increase in cash used by financing activities was primarily due to higher net paydown of long-term debt, partially offset by fewer share repurchases[94](index=94&type=chunk) [Debt and Guarantor Financial Information](index=25&type=section&id=Debt%20and%20Guarantor%20Financial%20Information) Outstanding debt principal was **$896.0 million**, with the company in compliance with all debt covenants - Outstanding debt principal was **$896.0 million** at June 30, 2025, comprising **$600.0 million** in 2032 Senior Notes and **$296.0 million** on Term Loan B[95](index=95&type=chunk) - The company is in compliance with all agreements and instruments governing its debt, including financial covenants[97](index=97&type=chunk) Issuers and Guarantors Financial Information (In thousands) | (in thousands) | June 30, 2025 | September 30, 2024 | | :------------- | :------------ | :----------------- | | Cash and cash equivalents | $41,923 | $32,817 | | Inventory | $745,712 | $781,512 | | Total assets | $2,048,655 | $2,085,179 | | Total liabilities | $1,785,679 | $1,951,874 | [Share Repurchase Programs](index=25&type=section&id=Share%20Repurchase%20Programs) The company repurchased **3.3 million** shares for **$33.0 million** during the nine months ended June 30, 2025 Share Repurchases (In millions, excluding excise taxes) | Share Repurchases (excluding excise taxes) | Nine Months Ended June 30, 2025 | Nine Months Ended June 30, 2024 | | :----------------------------------------- | :------------------------------ | :------------------------------ | | Shares repurchased (millions) | 3.3 | 4.3 | | Total cost (millions) | $33.0 | $50.0 | [Contractual Obligations](index=25&type=section&id=Contractual%20Obligations) No material changes to contractual obligations, excluding debt, have occurred since September 30, 2024 - No material changes to contractual obligations, excluding debt, since September 30, 2024[101](index=101&type=chunk) [Off-Balance Sheet Financing Arrangements](index=25&type=section&id=Off-Balance%20Sheet%20Financing%20Arrangements) No off-balance sheet financing arrangements exist, except for outstanding letters of credit for inventory and self-insurance - No off-balance sheet financing arrangements other than outstanding letters of credit for inventory purchases and self-insurance programs[102](index=102&type=chunk) [Critical Accounting Estimates](index=26&type=section&id=Critical%20Accounting%20Estimates) No material changes to critical accounting estimates or assumptions have occurred since September 30, 2024 - No material changes to critical accounting estimates or assumptions since September 30, 2024[103](index=103&type=chunk) [Recent Accounting Pronouncements](index=26&type=section&id=Recent%20Accounting%20Pronouncements) Refer to Note 2 of the financial statements for details on recent accounting pronouncements - Refer to Note 2 for details on recent accounting pronouncements[104](index=104&type=chunk) [U.S. Income Tax Regulations](index=26&type=section&id=U.S.%20Income%20Tax%20Regulations) The company is evaluating the financial impact of "The One Big Beautiful Bill Act," signed into law on July 4, 2025 - The company is evaluating the impact of "The One Big Beautiful Bill Act," signed on July 4, 2025, on its financial statements[105](index=105&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=27&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company faces market risks from foreign currency, interest rates, and government actions, with no material changes since FY2024 - The company is subject to market risks from foreign currency fluctuations, interest rates, and government actions[107](index=107&type=chunk) - No material changes to market risks have occurred since the fiscal year ended September 30, 2024[107](index=107&type=chunk) [Item 4. Controls and Procedures](index=27&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded disclosure controls and procedures were effective as of June 30, 2025, with no material changes in internal control - Management, including the CEO and CFO, concluded that disclosure controls and procedures were effective as of June 30, 2025[108](index=108&type=chunk)[112](index=112&type=chunk) - Disclosure controls provide reasonable assurance that required information is recorded, processed, summarized, and reported timely[112](index=112&type=chunk) - No material changes in internal control over financial reporting occurred during the most recent fiscal quarter[113](index=113&type=chunk) [PART II — OTHER INFORMATION](index=28&type=section&id=PART%20II%20%E2%80%94%20OTHER%20INFORMATION) [Item 1. Legal Proceedings](index=28&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in various legal proceedings but expects no material financial impact, and is in compliance with regulations - The company is involved in various claims and lawsuits but does not expect a material adverse impact on its financial position, cash flows, or results of operations[115](index=115&type=chunk) - The company believes it is in material compliance with U.S. and foreign laws and regulations regarding product and sales methods[116](index=116&type=chunk) [Item 1A. Risk Factors](index=28&type=section&id=Item%201A.%20Risk%20Factors) Readers should review risk factors from the FY2024 Annual Report on Form 10-K, as no material changes have occurred - Readers should consider risk factors from the Annual Report on Form 10-K for the fiscal year ended September 30, 2024[117](index=117&type=chunk) - No material changes to the disclosed risk factors have occurred[117](index=117&type=chunk) [Item 2. Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities](index=28&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities,%20Use%20of%20Proceeds,%20and%20Issuer%20Purchases%20of%20Equity%20Securities) The company repurchased **1.46 million** shares for **$13.0 million** during the quarter, with **$487.77 million** remaining authorized Issuer Purchases of Equity Securities | Fiscal Period | Total Number of Shares Purchased | Average Price Paid per Share | | :------------------ | :------------------------------- | :--------------------------- | | Apr 1 - Apr 30, 2025 | — | $— | | May 1 - May 31, 2025 | 610,460 | $9.00 | | Jun 1 - Jun 30, 2025 | 845,404 | $8.90 | | Total this quarter | 1,455,864 | $8.94 | - As of June 30, 2025, approximately **$487.77 million** remained authorized for share repurchases under the program, which was extended through September 30, 2029[118](index=118&type=chunk)[121](index=121&type=chunk) [Item 5. Other Information](index=28&type=section&id=Item%205.%20Other%20Information) No director or officer adopted, modified, or terminated any Rule 10b5-1 or non-Rule 10b5-1 trading arrangements - No director or officer adopted, modified, or terminated any Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during the quarter ended June 30, 2025[119](index=119&type=chunk) [Item 6. Exhibits](index=29&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with the Quarterly Report on Form 10-Q, including corporate documents and certifications - Exhibits include the Third Restated Certificate of Incorporation, Amended and Restated By-Laws, List of Subsidiary Guarantors, CEO and CFO certifications (Rule 13a-14(a)/15d-14(a) and Section 1350), and financial information in iXBRL format[122](index=122&type=chunk)