Sally Beauty Holdings Reports Fourth Quarter and Full Year Fiscal 2025 Results

Core Insights - The company reported fourth quarter results that exceeded expectations, with solid topline growth and healthy gross margins leading to a 10% adjusted EPS growth and robust free cash flow [2][6] - Full year results showed a 40 basis points adjusted operating margin expansion and a 12% adjusted EPS growth, while cash was deployed for growth investments, balance sheet strengthening, and shareholder returns [2][6] - The company expressed confidence in its fiscal 2026 guidance and long-term financial targets, supported by resilient customers and strategic initiatives [2] Fiscal 2025 Fourth Quarter Summary - Consolidated net sales reached $947 million, a 1.3% increase year-over-year, with comparable sales also up 1.3% [6][7] - GAAP diluted EPS increased by 7% to $0.49, while adjusted diluted EPS rose by 10% to $0.55 [6][7] - Cash flow from operations was $121 million, with free cash flow totaling $78 million [6][8] Fiscal 2025 Full Year Summary - Total consolidated net sales for the year were $3.70 billion, a slight decrease of 0.4% compared to the previous year [6][7] - Full year GAAP diluted EPS increased by 32% to $1.89, and adjusted diluted EPS grew by 12% to $1.90 [6][7] - Cash flow from operations for the year was $275 million, with free cash flow of $216 million [6][7] Balance Sheet and Cash Flow - As of September 30, 2025, the company had cash and cash equivalents of $149 million and no outstanding borrowings under its revolving credit line [5][8] - Inventory decreased by 4.7% year-over-year to $988 million [5] Segment Performance - In Q4, Sally Beauty segment net sales were $541.6 million, up 1.4%, while Beauty Systems Group net sales were $405.5 million, an increase of 1.1% [9][31] - The gross margin for Sally Beauty improved by 90 basis points to 61.3%, while Beauty Systems Group's gross margin expanded by 100 basis points to 40.0% [9][31] Fiscal 2026 Guidance - The company provided guidance for consolidated net sales between $3.71 billion and $3.77 billion, with comparable sales expected to be flat to up 1% [10] - Adjusted diluted EPS is projected to be between $2.00 and $2.10, with free cash flow anticipated at approximately $200 million [10] Long-Term Outlook - The company set long-term financial targets for fiscal 2028, including annual consolidated net sales growth of 1% to 3% and adjusted diluted EPS growth of over 10% [12]