Sally Beauty Raises Low End of FY26 EPS View on Q1 Earnings Beat

Core Insights - Sally Beauty Holdings, Inc. (SBH) reported fiscal first-quarter 2026 results with top line slightly below and bottom line above Zacks Consensus Estimates, both metrics increased year over year [1] Financial Performance - Adjusted earnings were 48 cents per share, exceeding the Zacks Consensus Estimate of 47 cents, marking a 12% increase from 43 cents per share in the prior year [2] - Consolidated net sales reached $943 million, slightly below the Zacks Consensus Estimate of $944 million, reflecting a 0.6% increase from $937.9 million in the year-ago period [3] - Global e-commerce sales grew 11% to $111 million, accounting for 11.7% of total net sales [3] Margin and Cost Analysis - Adjusted gross margin expanded by 50 basis points to 51.3% [4] - Adjusted selling, general and administrative expenses rose to $404 million, an increase of $6 million from the previous year [4] - Adjusted operating earnings were $80 million, at the higher end of management's guidance, with an adjusted operating margin of 8.5% [4] Segment Performance - Sally Beauty Supply segment net sales increased by 1.2% year over year to $531.6 million, with comparable sales climbing 0.1% and operating margin declining by 50 basis points to 14.7% [5] - Beauty Systems Group segment net sales decreased by 0.2% to $411.6 million, with comparable sales down 0.2%, but operating margin improved by 90 basis points to 13.1% [5] Financial Health - At the end of the fiscal first quarter, cash and cash equivalents were $157.2 million, long-term debt was $842.5 million, and total stockholders' equity was $823.6 million [6] - Cash flow from operations was $93 million, with free cash flow of $57 million; the company repaid $20 million of term loan B debt and repurchased 1.4 million shares for $21 million, resulting in a net debt leverage of 1.5x [6] Future Outlook - The company raised the lower end of its fiscal 2026 EPS guidance to $2.02-$2.10 from the previous $2.00-$2.10, while expecting consolidated net sales of $3.71-$3.77 billion and comparable sales growth to be flat to up 1% [7][8] - For Q2 fiscal 2026, consolidated net sales are projected to be $895-$905 million with comparable sales growth of 0.5-1.5%, and adjusted EPS is expected to be 39-42 cents [9]