Sally Beauty Q3 Earnings Beat Estimates, Comparable Sales Dip 0.4% Y/Y

Core Insights - Sally Beauty Holdings, Inc. reported third-quarter fiscal 2025 results with adjusted earnings of 51 cents per share, exceeding the Zacks Consensus Estimate of 42 cents and up from 45 cents in the prior year [2][9] - Consolidated net sales were $933.3 million, matching the consensus estimate but reflecting a 1% decline year over year [2][9] - Comparable sales decreased by 0.4% year over year, influenced by macroeconomic uncertainties affecting consumer spending, although there was growth in hair color and digital marketplaces [3][9] Financial Performance - The consolidated gross profit was approximately $481 million, remaining flat year over year, while the adjusted gross margin improved by 100 basis points to 52% [4] - Adjusted selling, general and administrative expenses rose to $398.9 million, an increase of $2.1 million year over year, primarily due to higher labor and IT costs, partially offset by savings from growth initiatives [5] - Adjusted operating earnings increased to $86.1 million, with an adjusted operating margin of 9.2%, up 30 basis points from the previous year [6] Segment Performance - In the Sally Beauty Supply segment, net sales fell 1.8% year over year to $526.8 million, with comparable sales down 1.1% [7] - The Beauty Systems Group segment saw a slight increase in net sales of 0.2% year over year to $406.5 million, with comparable sales up 0.5% [8] Cash Flow and Debt - At the end of the fiscal third quarter, the company had cash and cash equivalents of $112.8 million and long-term debt of $882.4 million [10] - The company generated cash flow from operations of $69.4 million and operating free cash flow of $49.1 million during the quarter [10] Future Outlook - Management revised its fiscal 2025 comparable sales outlook to the high end of the previously issued range, now projecting flat comparable sales [12][13] - The adjusted operating margin expectation has been raised to a range of 8.6-8.7%, compared to the earlier guidance of 8-8.5% [13]