Sally Beauty Holdings (NYSE: SBH) delivered a mixed fiscal Q2 print Monday morning. The company beat earnings expectations on stronger margins and cash generation, while revenue came in just under the low end of its own guidance.
Adjusted diluted EPS of $0.44 topped the $0.41 consensus, a 5% increase year over year. Net sales of $904 million rose 2.3% but slipped fractionally below the $905 million floor of management’s prior range. Comparable sales rose 1.3%.
The shortfall was concentrated in the Beauty Systems Group segment. The core Sally Beauty retail segment grew sales 4.1% to $521 million, with comps up 2.5%. Global e-commerce reached $108 million, up 13%, and now represents 12% of total net sales.
Margin expansion was the cleaner part of the story. Adjusted operating margin came in at 8.1%, with both segments contributing to gross margin gains. Cash flow from operations was $73 million and free cash flow was $44 million. Management deployed capital across $25 million in buybacks (1.7 million shares) and $20 million in term loan repayment, ending the quarter at 1.5x net leverage with $157 million in cash and an undrawn revolver.
CEO Denise Paulonis said, “Our second quarter results reflect solid execution and the resilience of our operating model amid a dynamic macroeconomic environment.”
Guidance
Sally tightened its FY26 net sales range to $3.725 to $3.75 billion and reiterated all other full-year metrics. Comparable sales are guided flat to up 1%, adjusted operating earnings to $328 to $342 million, and adjusted diluted EPS to $2.02 to $2.10. Free cash flow targets held.
What investors are watching
Shares traded up roughly 2% in pre-market on the print. The setup reflects a company executing on the levers it controls, including pricing, mix, margin, and capital return, while top-line growth remains gated by softness in the professional channel. With the balance sheet inside 1.5x and free cash flow funding both buybacks and deleveraging, the question for the back half is whether BSG stabilizes enough to push consolidated growth above the current low-single-digit pace.
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