# Sally Beauty Holdings, Inc. (SBH)

Informational only - not investment advice.

CIK: 0001368458
SIC: 5990 Retail-Retail Stores, NEC
SIC breadcrumb: [Retail Trade](/division/G/) > [Miscellaneous Retail](/major-group/59/) > [SIC 5990 Retail-Retail Stores, NEC](/industry/5990/)
Latest 10-K filed: 2025-11-13
SEC page: https://www.sec.gov/edgar/browse/?CIK=1368458
Filing source: https://www.sec.gov/Archives/edgar/data/1368458/000119312525280122/sbh-20250930.htm

## Selected Fundamentals
| Metric | Value | Unit | FY | Filed |
| --- | ---: | --- | ---: | --- |
| Revenue | 3701424000 | USD | 2025 | 2025-11-13 |
| Net income | 195878000 | USD | 2025 | 2025-11-13 |
| Assets | 2871096000 | USD | 2025 | 2025-11-13 |

## Financials

Annual standardized facts from SEC companyfacts as of latest extracted filing date 2025-11-13. Source: https://data.sec.gov/api/xbrl/companyfacts/CIK0001368458.json. Derived margins are computed from the extracted annual SEC facts.

| Metric | 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | 2024 | 2025 |
| --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: |
| Revenue | 3,952,618,000 | 3,938,317,000 | 3,932,565,000 | 3,876,411,000 | 3,514,330,000 | 3,874,997,000 | 3,815,565,000 | 3,728,131,000 | 3,717,031,000 | 3,701,424,000 |
| Net income | 222,942,000 | 215,076,000 | 258,047,000 | 271,623,000 | 184,600,000 | 239,858,000 | 183,553,000 | 184,600,000 | 153,414,000 | 195,878,000 |
| Operating income | 498,297,000 | 478,597,000 | 426,589,000 | 458,473,000 | 258,760,000 | 418,443,000 | 337,640,000 | 325,029,000 | 282,733,000 | 327,810,000 |
| Gross profit | 1,963,940,000 | 1,964,895,000 | 1,944,413,000 | 1,910,542,000 | 1,715,594,000 | 1,953,334,000 | 1,919,165,000 | 1,898,180,000 | 1,890,332,000 | 1,910,748,000 |
| Diluted EPS | 1.50 | 1.56 | 2.08 | 2.26 | 0.99 | 2.10 | 1.66 | 1.69 | 1.43 | 1.89 |
| Assets | 2,095,038,000 | 2,099,007,000 | 2,097,414,000 | 2,098,446,000 | 2,895,147,000 | 2,847,132,000 | 2,576,867,000 | 2,725,250,000 | 2,792,899,000 | 2,871,096,000 |
| Liabilities | 2,408,229,000 | 2,462,623,000 | 2,365,970,000 | 2,158,769,000 | 2,879,704,000 | 2,566,391,000 | 2,283,231,000 | 2,216,502,000 | 2,164,364,000 | 2,076,889,000 |
| Stockholders' equity | -276,166,000 | -363,616,000 | -268,556,000 | -60,323,000 | 15,443,000 | 280,741,000 | 293,636,000 | 508,748,000 | 628,535,000 | 794,207,000 |
| Cash and cash equivalents | 86,622,000 | 63,759,000 | 77,295,000 | 71,495,000 | 514,151,000 | 400,959,000 | 70,558,000 | 123,001,000 | 107,961,000 | 149,162,000 |
| Net margin | 5.64% | 5.46% | 6.56% | 7.01% | 5.25% | 6.19% | 4.81% | 4.95% | 4.13% | 5.29% |
| Operating margin | 12.61% | 12.15% | 10.85% | 11.83% | 7.36% | 10.80% | 8.85% | 8.72% | 7.61% | 8.86% |

## Quarterly

Quarterly standardized facts from SEC companyfacts as of latest extracted filing date 2026-05-11. Source: https://data.sec.gov/api/xbrl/companyfacts/CIK0001368458.json.

Flow metrics use discrete quarter-length periods from 10-Q/10-Q/A filings. Q4 revenue and net income are derived only when annual FY and nine-month YTD facts exist for the same fiscal year; derived Q4 values are labeled. EPS Q4 is not derived.

| Quarter | End date | Revenue | Net income | Diluted EPS | Method |
| --- | --- | ---: | ---: | ---: | --- |
| 2022-Q3 | 2022-06-30 |  |  | 0.43 | reported discrete quarter |
| 2023-Q1 | 2022-12-31 |  |  | 0.46 | reported discrete quarter |
| 2023-Q3 | 2023-03-31 |  | 40,861,000 |  | reported discrete quarter |
| 2023-Q2 | 2023-03-31 |  |  | 0.37 | reported discrete quarter |
| 2023-Q3 | 2023-06-30 | 931,008,000 |  | 0.46 | reported discrete quarter |
| 2023-Q4 | 2023-09-30 | 921,356,000 | 42,581,000 |  | derived Q4 = FY annual - nine-month YTD |
| 2024-Q1 | 2023-12-31 | 931,302,000 | 38,390,000 | 0.35 | reported discrete quarter |
| 2024-Q2 | 2023-12-31 |  | 38,390,000 |  | reported discrete quarter |
| 2024-Q3 | 2024-03-31 |  | 29,244,000 |  | reported discrete quarter |
| 2024-Q2 | 2024-03-31 | 908,361,000 |  | 0.27 | reported discrete quarter |
| 2024-Q3 | 2024-06-30 | 942,340,000 |  | 0.36 | reported discrete quarter |
| 2024-Q4 | 2024-09-30 | 935,028,000 | 48,056,000 |  | derived Q4 = FY annual - nine-month YTD |
| 2025-Q1 | 2024-12-31 | 937,895,000 | 61,013,000 | 0.58 | reported discrete quarter |
| 2025-Q2 | 2024-12-31 |  | 61,013,000 |  | reported discrete quarter |
| 2025-Q2 | 2025-03-31 | 883,146,000 |  | 0.38 | reported discrete quarter |
| 2025-Q3 | 2025-03-31 |  | 39,210,000 |  | reported discrete quarter |
| 2025-Q3 | 2025-06-30 | 933,307,000 |  | 0.44 | reported discrete quarter |
| 2025-Q4 | 2025-09-30 | 947,076,000 | 49,931,000 |  | derived Q4 = FY annual - nine-month YTD |
| 2026-Q2 | 2025-12-31 |  | 45,557,000 |  | reported discrete quarter |
| 2026-Q1 | 2025-12-31 | 943,168,000 | 45,557,000 | 0.45 | reported discrete quarter |
| 2026-Q2 | 2026-03-31 | 903,382,000 |  | 0.43 | reported discrete quarter |

## Macro Cross-References
- [CPIAUCSL](/indicator/CPIAUCSL/): Consumer Price Index for All Urban Consumers: All Items in U.S. City Average
- [UNRATE](/indicator/UNRATE/): Unemployment Rate
- [FEDFUNDS](/indicator/FEDFUNDS/): Federal Funds Effective Rate
- [CES0500000003](/indicator/CES0500000003/): Average Hourly Earnings of All Employees, Total Private
- [DFEDTARU](/indicator/DFEDTARU/): Federal Funds Target Range - Upper Limit
- [DFEDTARL](/indicator/DFEDTARL/): Federal Funds Target Range - Lower Limit
- [DGS3MO](/indicator/DGS3MO/): Market Yield on U.S. Treasury Securities at 3-Month Constant Maturity
- [DGS2](/indicator/DGS2/): Market Yield on U.S. Treasury Securities at 2-Year Constant Maturity
- [DGS10](/indicator/DGS10/): Market Yield on U.S. Treasury Securities at 10-Year Constant Maturity
- [DGS30](/indicator/DGS30/): Market Yield on U.S. Treasury Securities at 30-Year Constant Maturity
- [T10Y2Y](/indicator/T10Y2Y/): 10-Year Treasury Constant Maturity Minus 2-Year Treasury Constant Maturity
- [CPILFESL](/indicator/CPILFESL/): Consumer Price Index for All Urban Consumers: All Items Less Food and Energy
- [CPIUFDSL](/indicator/CPIUFDSL/): Consumer Price Index for All Urban Consumers: Food
- [CPIENGSL](/indicator/CPIENGSL/): Consumer Price Index for All Urban Consumers: Energy
- [CUSR0000SAH1](/indicator/CUSR0000SAH1/): Consumer Price Index for All Urban Consumers: Shelter
- [PCEPI](/indicator/PCEPI/): Personal Consumption Expenditures: Chain-type Price Index
- [PCEPILFE](/indicator/PCEPILFE/): Personal Consumption Expenditures Excluding Food and Energy: Chain-type Price Index
- [PPIACO](/indicator/PPIACO/): Producer Price Index by Commodity: All Commodities
- [T10YIE](/indicator/T10YIE/): 10-Year Breakeven Inflation Rate
- [U6RATE](/indicator/U6RATE/): Total Unemployed, Plus All Marginally Attached Workers Plus Total Employed Part Time for Economic Reasons
- [PAYEMS](/indicator/PAYEMS/): All Employees, Total Nonfarm
- [CIVPART](/indicator/CIVPART/): Labor Force Participation Rate
- [EMRATIO](/indicator/EMRATIO/): Employment-Population Ratio
- [UNEMPLOY](/indicator/UNEMPLOY/): Unemployed
- [CE16OV](/indicator/CE16OV/): Employment Level
- [ICSA](/indicator/ICSA/): Initial Claims
- [JTSJOL](/indicator/JTSJOL/): Job Openings: Total Nonfarm
- [JTSQUR](/indicator/JTSQUR/): Quits: Total Nonfarm
- [GDPC1](/indicator/GDPC1/): Real Gross Domestic Product
- [A191RL1Q225SBEA](/indicator/A191RL1Q225SBEA/): Real Gross Domestic Product: Percent Change from Preceding Period
- [INDPRO](/indicator/INDPRO/): Industrial Production: Total Index
- [TCU](/indicator/TCU/): Capacity Utilization: Total Index
- [HOUST](/indicator/HOUST/): New Privately-Owned Housing Units Started: Total Units
- [PERMIT](/indicator/PERMIT/): New Privately-Owned Housing Units Authorized in Permit-Issuing Places: Total Units
- [RSAFS](/indicator/RSAFS/): Advance Retail Sales: Retail Trade
- [PCE](/indicator/PCE/): Personal Consumption Expenditures
- [DSPIC96](/indicator/DSPIC96/): Real Disposable Personal Income
- [PSAVERT](/indicator/PSAVERT/): Personal Saving Rate
- [M2SL](/indicator/M2SL/): M2
- [BOPGSTB](/indicator/BOPGSTB/): U.S. International Trade in Goods and Services: Balance
- [MSPUS](/indicator/MSPUS/): Median Sales Price of Houses Sold for the United States
- [HSN1F](/indicator/HSN1F/): New One Family Houses Sold: United States
- [RHORUSQ156N](/indicator/RHORUSQ156N/): Homeownership Rate in the United States
- [TTLCONS](/indicator/TTLCONS/): Total Construction Spending: Total Construction in the United States
- [RRVRUSQ156N](/indicator/RRVRUSQ156N/): Rental Vacancy Rate in the United States
- [TOTALSL](/indicator/TOTALSL/): Total Consumer Credit Owned and Securitized
- [REVOLSL](/indicator/REVOLSL/): Revolving Consumer Credit Owned and Securitized
- [DRCCLACBS](/indicator/DRCCLACBS/): Delinquency Rate on Credit Card Loans, All Commercial Banks
- [GDP](/indicator/GDP/): Gross Domestic Product
- [GPDI](/indicator/GPDI/): Gross Private Domestic Investment
- [GCE](/indicator/GCE/): Government Consumption Expenditures and Gross Investment
- [PCEC](/indicator/PCEC/): Personal Consumption Expenditures
- [NETEXP](/indicator/NETEXP/): Net Exports of Goods and Services
- [GFDEBTN](/indicator/GFDEBTN/): Federal Debt: Total Public Debt
- [GFDEGDQ188S](/indicator/GFDEGDQ188S/): Federal Debt: Total Public Debt as Percent of Gross Domestic Product
- [FYFSD](/indicator/FYFSD/): Federal Surplus or Deficit
- [FGRECPT](/indicator/FGRECPT/): Federal Government Current Receipts
- [FGEXPND](/indicator/FGEXPND/): Federal Government: Current Expenditures
- [MANEMP](/indicator/MANEMP/): All Employees, Manufacturing
- [USCONS](/indicator/USCONS/): All Employees, Construction
- [USTRADE](/indicator/USTRADE/): All Employees, Retail Trade
- [USFIRE](/indicator/USFIRE/): All Employees, Financial Activities
- [USGOVT](/indicator/USGOVT/): All Employees, Government
- [AWHAETP](/indicator/AWHAETP/): Average Weekly Hours of All Employees, Total Private
- [DGORDER](/indicator/DGORDER/): Manufacturers' New Orders: Durable Goods
- [NEWORDER](/indicator/NEWORDER/): Manufacturers' New Orders: Nondefense Capital Goods Excluding Aircraft
- [BUSINV](/indicator/BUSINV/): Total Business Inventories
- [EXPGS](/indicator/EXPGS/): Exports of Goods and Services
- [IMPGS](/indicator/IMPGS/): Imports of Goods and Services
- [IR](/indicator/IR/): Import Price Index (End Use): All Commodities
- [PPIFIS](/indicator/PPIFIS/): Producer Price Index by Commodity: Final Demand

## Latest quarter (10-Q)

Latest 10-Q source: https://www.sec.gov/Archives/edgar/data/1368458/000119312526216750/sbh-20260331.htm

Extracted between Part I Item 2 and the next Item 3/4 or Part II heading after HTML sanitization.
Confidence: high
Filing date: 2026-05-11
Report date: 2026-03-31

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

This section discusses management’s view of the financial condition, results of operations and cash flows of Sally Beauty for the periods covered by this Quarterly Report. This section should be read in conjunction with the information contained in our Annual Report on Form 10-K for the fiscal year ended September 30, 2025, including the Risk Factors sections therein, and information contained elsewhere in this Quarterly Report, including the condensed consolidated interim financial statements and notes to those financial statements.

Financial Summary for the Three Months Ended March 31, 2026

•
Consolidated net sales for the three months ended March 31, 2026, increased $20.2 million, or 2.3%, to $903.4 million, compared to the three months ended March 31, 2025. Consolidated net sales included a positive impact from changes in foreign currency exchange rates of $12.8 million;

•
Consolidated comparable sales were 1.3% for the three months ended March 31, 2026;

•
Consolidated gross profit for the three months ended March 31, 2026, increased $17.0 million, or 3.7%, to $475.8 million, compared to the three months ended March 31, 2025. Consolidated gross margin increased 70 bps to 52.7% for the three months ended March 31, 2026, compared to the three months ended March 31, 2025;

•
Consolidated operating earnings for the three months ended March 31, 2026, increased $2.6 million, or 3.7%, to $71.9 million, compared to the three months ended March 31, 2025. Operating margin increased 10 bps to 8.0% for the three months ended March 31, 2026, compared to the three months ended March 31, 2025;

•
For the three months ended March 31, 2026, our consolidated net earnings increased $3.5 million, or 8.9%, to $42.7 million, compared to the three months ended March 31, 2025;

•
For the three months ended March 31, 2026, our diluted earnings per share was $0.43 compared to $0.38 for the three months ended March 31, 2025; and

•
Cash provided by operations was $73.3 million for the three months ended March 31, 2026, compared to $51.1 million for the three months ended March 31, 2025.

Comparable Sales

We believe that comparable sales is an appropriate performance indicator to measure our sales growth compared to the prior period. Our comparable sales include sales from stores that have been operating for 14 months or longer as of the last day of a month and from e-commerce revenue. Additionally, comparable sales include sales to franchisees and full service sales. Our comparable sales excludes the effect of changes in foreign exchange rates and sales from stores relocated until 14 months after the relocation. Revenue from acquired stores is excluded from our comparable sales calculation until 14 months after the acquisition. Our calculation of comparable sales might not be the same as other retailers as the calculation varies across the retail industry.

16

Overview

Key Operating Metrics

The following table sets forth, for the periods indicated, information concerning key measures on which we rely to evaluate our operating performance (dollars in thousands):

Three Months Ended March 31,

Six Months Ended March 31,

2026

2025

Increase (Decrease)

2026

2025

Increase (Decrease)

Net sales:

Sally

$

521,236

$

500,575

$

20,661

4.1

%

$

1,052,837

$

1,026,021

$

26,816

2.6

%

BSG

382,146

382,571

(425

)

(0.1

)%

793,713

795,020

(1,307

)

(0.2

)%

Consolidated

$

903,382

$

883,146

$

20,236

2.3

%

$

1,846,550

$

1,821,041

$

25,509

1.4

%

Gross profit:

Sally

$

319,332

$

306,397

$

12,935

4.2

%

$

637,274

$

619,653

$

17,621

2.8

%

BSG

156,440

152,420

4,020

2.6

%

321,757

316,004

5,753

1.8

%

Consolidated

$

475,772

$

458,817

$

16,955

3.7

%

$

959,031

$

935,657

$

23,374

2.5

%

Segment gross margin:

Sally

61.3

%

61.2

%

10

 bps

60.5

%

60.4

%

10

 bps

BSG

40.9

%

39.8

%

110

 bps

40.5

%

39.7

%

80

 bps

Consolidated

52.7

%

52.0

%

70

 bps

51.9

%

51.4

%

50

 bps

Net earnings:

Segment operating earnings:

Sally

$

78,149

$

77,305

$

844

1.1

%

$

156,046

$

157,179

$

(1,133

)

(0.7

)%

BSG

47,368

43,934

3,434

7.8

%

101,275

94,403

6,872

7.3

%

Segment operating earnings

125,517

121,239

4,278

3.5

%

257,321

251,582

5,739

2.3

%

Unallocated expenses (a)

53,586

51,866

1,720

3.3

%

109,455

81,889

27,566

33.7

%

Consolidated operating earnings

71,931

69,373

2,558

3.7

%

147,866

169,693

(21,827

)

(12.9

)%

Interest expense

14,165

16,289

(2,124

)

(13.0

)%

28,785

33,731

(4,946

)

(14.7

)%

Earnings before provision for income taxes

57,766

53,084

4,682

8.8

%

119,081

135,962

(16,881

)

(12.4

)%

Provision for income taxes

15,071

13,874

1,197

8.6

%

30,829

35,739

(4,910

)

(13.7

)%

Net earnings

$

42,695

$

39,210

$

3,485

8.9

%

$

88,252

$

100,223

$

(11,971

)

(11.9

)%

.

Comparable sales growth (decline):

Sally

2.5

%

(0.3

)%

280

 bps

1.3

%

0.8

%

50

 bps

BSG

(0.3

)%

(2.7

)%

240

 bps

(0.2

)%

(0.6

)%

40

 bps

Consolidated

1.3

%

(1.3

)%

260

 bps

0.6

%

0.2

%

40

 bps

Number of stores at end-of-period (including franchises):

Sally

3,079

3,117

(38

)

(1.2

)%

BSG

1,320

1,329

(9

)

(0.7

)%

Consolidated

4,399

4,446

(47

)

(1.1

)%

(a)
Unallocated expenses consist of corporate and shared costs and are included in selling, general and administrative expenses in our condensed consolidated statements of earnings. Additionally, unallocated expenses include certain costs associated with our Fuel for Growth initiative as well as the $26.6 million gain related to the sale of our corporate headquarters during the six months ended March 31, 2025. See Note 7, Property and Equipment, Net, for more information related to the sale of our corporate headquarters.

17

Results of Operations

The Three Months Ended March 31, 2026, compared to the Three Months Ended March 31, 2025

Net Sales

Sally. The increase in net sales for Sally was primarily driven by the following (in thousands):

Comparable sales

$

12,498

Sales outside comparable sales (a)

(3,323

)

Foreign currency exchange

11,486

Total

$

20,661

(a)
Includes closed stores, net of stores opened for less than 14 months.

Sally's net sales increase was primarily driven by an increase in comparable sales and positive impacts from foreign exchange rates, partially offset by net stores closed during the past twelve months. The increase in comparable sales was primarily driven by strong growth in hair color and digital marketplaces, partially offset by softness in our hair care category and the strategic exit of the majority of our full service operations across Europe. Sally’s comparable sales reflect increases in our number of transactions and average unit retail.

BSG. The decrease in net sales for BSG was primarily driven by the following (in thousands):

Comparable sales

$

(1,118

)

Sales outside comparable sales (a)

(660

)

Foreign currency exchange

1,353

Total

$

(425

)

(a)
Includes closed stores, net of stores opened for less than 14 months and sales from acquired stores.

BSG's net sales decrease was primarily from a decrease in comparable sales, partially offset by positive impacts from foreign exchange rates. The decrease in comparable sales was driven by external factors that impacted stylist purchasing behavior, partially offset by strong performance in our color category. BSG's comparable sales were slightly down with a decrease in the average number of units per transaction, offset by a higher average unit retail.

Gross Profit

Sally. Sally’s gross profit increased for the three months ended March 31, 2026, as a result of an increase in net sales and a higher gross margin on units sold. Sally’s gross margin improvement was driven primarily by higher product margins, resulting from benefits from our Fuel for Growth initiative, partially offset by impacts of the write-off of certain inventory related to the strategic exit of the majority of all our low-margin full service operations in Europe in connection with our Fuel for Growth initiative.

BSG. BSG’s gross profit increased for the three months ended March 31, 2026, as a result of a higher gross margin on units sold, partially offset by a decrease in net sales. BSG’s gross margin improvement was driven by higher product margins, resulting from benefits from our Fuel for Growth initiative.

Selling, General and Administrative Expenses

Sally. Sally’s selling, general and administrative expenses increased $12.1 million, or 5.3%, for the three months ended March 31, 2026, and included an unfavorable impact from foreign exchange rates of $5.5 million. As a percentage of Sally net sales, selling, general and administrative expenses for the three months ended March 31, 2026, were 46.3%, compared to 45.8% for the three months ended March 31, 2025. The increase as a percentage of sales was primarily due to increased labor and other compensation-related expenses, higher commission costs from digital marketplaces, and higher rent and advertising expenses, partially offset by leveraging as a result of higher net sales, impacts of an impairment charge related to a trade name (non-cash expense of $1.8 million) in the prior year, and Fuel for Growth benefits.

BSG. BSG’s selling, general and administrative expenses increased $0.6 million, or 0.5%, for the three months ended March 31, 2026. As a percentage of BSG net sales, selling, general and administrative expenses for the three months ended March 31, 2026, were 28.5% compared to 28.4% for the three months ended March 31, 2025. The increase as a percentage of sales was primarily due to higher labor and other compensation-related expenses and rent expense, partially offset by lower depreciation and amortization expenses.

Unallocated. Unallocated selling, general and administrative expenses, which represent certain corporate costs that have not been charged to our reporting segments, increased $1.7 million, or 3.3%, for the three months ended March 31, 2026, primarily due to an increased labor and other compensation-related expenses, higher information technology expense, and higher facility expenses related to our new corporate headquarters, partially offset by lower expenses related to our Fuel for Growth initiative.

18

Interest Expense

The decrease in interest expense was primarily a result of a lower average outstanding principal balance on our Term Loan B. See Note 10, Short-term and Long-term Debt, in Item 1 of this quarterly report for more information on our debt.

Provision for Income Taxes

The effective tax rate was 26.1% for the three months ended March 31, 2026 and 2025. The effective tax rate remained unchanged, primarily due to a decrease related to foreign operations in the current quarter, offset by the unfavorable tax impact of executive compensation.

The Six Months Ended March 31, 2026, compared to the Six Months Ended March 31, 2025

Net Sales

Sally. The increase in net sales for Sally was primarily driven by the following (in thousands):

Comparable sales

$

13,077

Sales outside comparable sales (a)

(6,118

)

Foreign currency exchange

19,857

Total

$

26,816

(a)
Includes closed stores, net of stores opened for less than 14 months.

Sally's net sales increase was primarily driven by positive impacts from foreign exchange rates and an increase in comparable sales, partially offset by net stores closed during the past twelve months. The increase in comparable sales was primarily driven by strong growth in hair color and digital marketplaces, partially offset by external factors that impacted consumer spending, including the U.S. government shutdown during the beginning of our fiscal year, softness in our hair care category, and the strategic exit of the majority of our full servic

[Excerpt truncated for page length; source filing is linked above.]

## Latest 10-K MD&A

Extracted between Item 7 and the next Item 7A/8 heading after HTML sanitization.
Confidence: high

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following section discusses management’s view of the Company’s financial condition and results of operations for fiscal year 2025 compared to fiscal year 2024. See Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II of our Annual Report on Form 10-K for the fiscal year ended September 30, 2024, for a discussion of the financial condition and results of operations for fiscal year 2024 compared to fiscal year 2023. This section should be read in conjunction with the audited consolidated financial statements of the Company and the related notes included elsewhere in this Annual Report. This Management’s Discussion and Analysis of Financial Condition and Results of Operations section may contain forward-looking statements. See “Cautionary Notice Regarding Forward-Looking Statements” and “Risk Factors” for a discussion of the uncertainties, risks and assumptions associated with these forward-looking statements that could cause results to differ materially from those reflected in such forward-looking statements.

Financial Summary for the Fiscal Year Ended September 30, 2025:

•
Consolidated net sales for the fiscal year decreased $15.6 million, or 0.4%, to $3,701.4 million and included a negative impact from changes in foreign currency exchange rates of $11.4 million, or 0.3% of consolidated net sales;

•
Global e-commerce sales represented 10.7% of our consolidated net sales;

•
Consolidated comparable sales for the fiscal year increased 0.3% compared to the prior fiscal year;

•
Consolidated gross profit increased by $20.4 million, or 1.1%, to $1,910.7 million. Gross margin increased 70 basis points to 51.6% compared to the prior fiscal year;

•
Consolidated operating earnings for the fiscal year increased $45.1 million, or 15.9%, to $327.8 million. Operating margin increased 130 basis points to 8.9% compared to the prior fiscal year;

•
Consolidated net earnings for the fiscal year increased $42.5 million, or 27.7%, to $195.9 million;

•
Diluted earnings per share for the fiscal year were $1.89 compared to $1.43 for the prior fiscal year;

•
Cash provided by operations was $274.8 million for the fiscal year compared to $246.5 million for the prior fiscal year; and

•
Total debt reduction of $119.0 million and the repurchase of 5.0 million shares under our share repurchase program through the use of excess cash.

Trends Impacting Our Business

The macroeconomic environment remains uncertain, continuing to influence global inflationary pressures driven by shifting trade policies and recent tariff volatility. These factors are affecting both consumer and stylist shopping behaviors, as well as the cost of products and services. Although inflation has moderated, our customers are still experiencing inflation fatigue and heightened price sensitivity.

In response to this evolving economic climate, we are deepening our focus on personalization and refining our performance marketing strategies to stay closely aligned with changing customer needs and purchasing patterns. In addition, innovation in our product assortment and expansion of our distribution rights is benefiting our BSG business.

We remain vigilant in monitoring inflationary challenges and are actively implementing measures to mitigate their impact. These include driving operational efficiencies through our Fuel for Growth program, optimizing promotional strategies, and expanding partnerships with delivery service providers. While these initiatives have helped offset some macroeconomic headwinds, the long-term effects of inflation remain difficult to predict.

Comparable Sales

We believe that comparable sales is an appropriate performance indicator to measure our sales growth compared to the prior period. Our comparable sales include sales from stores that have been operating for 14 months or longer as of the last day of a month and from e-commerce revenue. Additionally, comparable sales include sales to franchisees and full-service sales. Our comparable sales amounts exclude the effect of changes in foreign exchange rates and sales from stores relocated until 14 months after the relocation. Revenue from acquired stores is excluded from our

- 31 -

comparable sales calculation until 14 months after the acquisition. Our calculation of comparable sales might not be the same as other retailers, as the calculation varies across the retail industry.

Results of Operations

Key Operating Metrics

The following table sets forth, for the periods indicated, information concerning key measures on which we rely to assess our operating performance (dollars in thousands):

2025 vs. 2024

Fiscal Year Ended September 30,

Amount

%

2025

2024

Change

Change

Net sales:

Sally

$

2,094,363

$

2,107,089

$

(12,726

)

(0.6

)%

BSG

1,607,061

1,609,942

(2,881

)

(0.2

)%

Consolidated

$

3,701,424

$

3,717,031

$

(15,607

)

(0.4

)%

Gross profit:

Sally

$

1,272,559

$

1,257,936

$

14,623

1.2

%

BSG

638,189

632,396

5,793

0.9

%

Consolidated

$

1,910,748

$

1,890,332

$

20,416

1.1

%

Segment gross margin:

Sally

60.8

%

59.7

%

110

bps

BSG

39.7

%

39.3

%

40

bps

Consolidated

51.6

%

50.9

%

70

bps

Net earnings:

Segment operating earnings:

Sally

$

326,667

$

334,319

$

(7,652

)

(2.3

)%

BSG

196,361

178,420

17,941

10.1

%

Segment operating earnings

523,028

512,739

10,289

2.0

%

Unallocated expenses and restructuring (a)

195,218

230,006

(34,788

)

(15.1

)%

Consolidated operating earnings

327,810

282,733

45,077

15.9

%

Interest expense

64,393

76,408

(12,015

)

(15.7

)%

Earnings before provision for income taxes

263,417

206,325

57,092

27.7

%

Provision for income taxes

67,539

52,911

14,628

27.6

%

Net earnings

$

195,878

$

153,414

$

42,464

27.7

%

Number of stores at end-of-period (including franchises):

Sally

3,096

3,129

(33

)

(1.1

)%

BSG

1,326

1,331

(5

)

(0.4

)%

Consolidated

4,422

4,460

(38

)

(0.9

)%

Comparable sales growth (decline)

Sally

0.4

%

(0.7

)%

110

bps

BSG

0.2

%

1.6

%

(140

)

bps

Consolidated

0.3

%

0.3

%

—

bps

(a)
Unallocated expenses represent certain corporate costs, including share-based compensation expense, that have not been charged to our segments and are included in SG&A expenses in our consolidated statements of earnings. Additionally, unallocated includes certain costs related to our Fuel for Growth initiative.

- 32 -

The Fiscal Year Ended September 30, 2025, compared to the Fiscal Year Ended September 30, 2024

Net Sales

Sally. The decrease in net sales for Sally was primarily driven by the following (in thousands):

Comparable sales

$

7,908

Sales outside comparable sales (a)

(12,770

)

Foreign currency exchange

(7,864

)

Total

$

(12,726

)

(a)
Includes closed stores, including the divesture of Spain, net of stores opened for less than 14 months.

Sally's net sales decrease was primarily driven by net stores closed during the fiscal year and negative impacts from foreign exchange rates, partially offset by an increase in comparable sales. The increase in comparable sales was primarily driven by strong growth in hair color and digital marketplaces, partially offset by external factors that impacted consumer spending, including weather, an unusually harsh flu season and macro uncertainty. Sally’s comparable sales increase was a result of growth in our average unit retail, driven by inflationary impacts and pricing leverage, partially offset by fewer average number of units per transaction and a decrease in the number of transactions.

BSG. The decrease in net sales for BSG was driven by the following (in thousands):

Comparable sales

$

2,716

Sales outside comparable sales (a)

(2,035

)

Foreign currency exchange

(3,562

)

Total

$

(2,881

)

(a)
Includes closed stores, including stores closed under the Plan, net of stores opened (or acquired) for less than 14 months.

BSG's net sales decrease was primarily from the negative impacts from foreign exchange rates and the impacts of net store closures over the past 12 months, partially offset by an increase in comparable sales. The increase in comparable sales was driven by continued momentum from expanded distribution and new brand innovation, partially offset by external factors during the fiscal year that impacted stylist purchasing behavior, including weather, an unusually harsh flu season and macro uncertainty. BSG's comparable sales increase was a result of an increase in number of transactions and a higher average unit retail, partially offset by fewer average number of units per transaction.

Gross Profit

Sally. Sally’s gross profit increase was a result of a higher gross margin, partially offset by lower net sales. Sally’s gross margin improvement was primarily driven by higher product margins, resulting from enhanced promotional strategies and benefits from our Fuel for Growth initiative, lower distribution and freight costs and lower shrink, partially offset by an inventory write-off in our European operations in connection with our Fuel for Growth initiative.

BSG. BSG’s gross profit increased as a result of a higher gross margin, partially offset by lower net sales. BSG’s gross margin improvement was driven by lower distribution and freight costs from supply chain efficiencies.

Selling, General and Administrative Expenses

Sally. Sally’s SG&A expenses increased $22.3 million, or 2.4%, to $945.9 million for fiscal year 2025, which includes the favorable impact from foreign exchange rates of $12.9 million due to the weakening of the U.S. Dollar compared to currencies in our foreign operations. As a percentage of Sally net sales, SG&A for fiscal year 2025 was 45.2% compared to 43.8% for fiscal year 2024. This increase as a percentage of sales was primarily due to increased labor and other compensation-related expenses, deleveraging resulting from lower net sales, and impairment charges related to certain trade names (non-cash expense of $4.5 million), partially offset by cost savings from our Fuel for Growth initiative.

BSG. BSG’s SG&A expenses decreased $12.2 million, or 2.7%, to $441.9 million for fiscal year 2025 and includes a favorable impact from foreign exchange rates of $0.8 million. As a percentage of BSG net sales, SG&A for fiscal year 2025 was 27.5% compared to 28.2% for fiscal year 2024. This decrease was primarily due to lower depreciation and delivery expenses, and savings generated from our Fuel for Growth initiative.

- 33 -

Unallocated. Unallocated SG&A expenses, which represent certain corporate costs that have not been charged to our reporting segments, decreased $34.9 million, or 15.2%, to $195.2 million, primarily due to a $26.6 million gain on the sale of our corporate headquarters and lower costs in connection to our Fuel for Growth initiative, partially offset by increased compensation-related expenses.

Interest Expense

The decrease in interest expense was driven by a lower outstanding principle balance and interest rate on our term loan B, a lower average outstanding balance on our ABL facility, and lower losses on debt extinguishment compared to the prior year.

Provision for Income Taxes

For fiscal years 2025 and 2024, our effective tax rate was unchanged at 25.6%. See Note 15, Income Taxes, for more information on our effective tax rate.

Our effective tax rate may fluctuate on a quarterly and/or annual basis due to various factors, including, but not limited to, total earnings and the mix of earnings by jurisdiction, new tax laws, as well as changes in valuation allowances and uncertain tax positions.

Liquidity and Capital Resources

Our principal sources of liquidity are cash from operations, cash and cash equivalents, and borrowings under our ABL facility. A substantial portion of our liquidity needs arise from funding the costs of our operations, working capital, capital expenditures and debt-servicing. Additionally, under our share repurchase program (see below for more details) we will, from time-to-time, repurchase shares of our common stock on the open market to return value to our shareholders. At September 30, 2025, we had $631.6 million in our liquidity pool, which includes amounts available for borrowings under our ABL facility of $482.4 million and cash and cash equivalents of $149.2 million. Based upon the current level of operations and anticipated growth, we anticipate existing cash balances (excluding certain amounts permanently invested in connection with foreign operations), as well as cash expected to be generated by operations and funds available under the ABL facility, will be sufficient to fund working capital requirements, potential acquisitions, anticipated capital expenditures (including information technology investments and store projects) and service our debt obligations over the next 12 months and beyond.

Our working capital (current assets less current liabilities) increased $12.9 million to $725.5 million at September 30, 2025, compared to $712.6 million at September 30, 2024. The increase in our working capital was driven by a higher cash and cash equivalents balance, and the timing of account payable and receivable, including contingent lease incentives recognized in connection with our new headquarters. These impacts were partially offset by lower inventory, as a result of a strategic focus on inventory optimization and productivity, the disposal of assets held for sale previously included in other current assets as a result of the sale of our corporate headquarters, and the timing of lease renewals and new leases. The ratio of current assets to current liabilities was 2.26 to 1.00 at September 30, 2025, compared to 2.20 to 1.00 at September 30, 2024.

Share Repurchase Programs

During the fiscal years 2025 and 2024, we repurchased and subsequently retired approximately 5.0 million shares and 5.1 million shares of our common stock under our share repurchase program at a cost of $53.5 million and $60.0 million, respectively, excluding the impact of excise taxes on share repurchases. Share repurchases are funded primarily with cash from operations and, occasionally, with borrowings under the ABL facility. As of September 30, 2025, we had approximately $467.3 million of additional share repurchase authorization remaining under our Share Repurchase Program. See Note 4, Accumulated Stockholders’ Equity, for more information about our share repurchase program.

- 34 -

Historical Cash Flows

The following table shows our sources and uses of cash for the periods presented (in thousands):

Fiscal Year Ended September 30,

2025

2024

Change

Net cash provided by operating activities

$

274,831

$

246,528

$

28,303

Net cash used by investing activities

(58,284

)

(108,910

)

50,626

Net cash used by financing activities

(178,423

)

(153,734

)

(24,689

)

Effect of foreign currency exchange rate changes on cash and cash equivalents

3,077

1,076

2,001

Net increase (decrease) in cash and cash equivalents

$

41,201

$

(15,040

)

$

56,241

Operating Activities

The increase in net cash provided by operating activities for fiscal year 2025, compared to fiscal year 2024, was primarily driven by increased net earnings, lower inventory purchases and lower interest paid on our debt, partially offset by the timing of accounts payable and income tax payments, and lower cash receipts from customers.

Investing Activities

The decrease in net cash used by investing activities for fiscal year 2025, compared to fiscal year 2024, was primarily the result of receiving $43.6 million from the sale of our corporate headquarters, a decrease in cash used for acquisitions by $4.9 million, and receiving $3.1 million related to the divesture of our operations in Spain.

Financing Activities

Net cash used by financing activities increased primarily due to the higher net paydown of our long-term debt in the current year compared to the prior year, partially offset by lower costs for debt issuance and fewer shares repurchased in the current year under our share repurchase program.

Debt and Guarantor Financial Information

At September 30, 2025, we had $875.0 million in outstanding debt, excluding finance lease obligations, unamortized debt issuance costs and discounts, in the aggregate, of $9.0 million. Our debt consists of $600.0 million in 2032 Senior Notes outstanding and $275.0 million remaining on our term loan B. At September 30, 2025, there were no outstanding borrowings under our ABL facility. We utilize our ABL facility for the issuance of letters of credit, certain working capital and liquidity needs, and to manage normal fluctuations in our operational cash flow. In that regard, we may from time to time draw funds under the ABL facility for general corporate purposes, including funding of capital expenditures, acquisitions, debt servicing and, occasionally, share repurchases. Amounts drawn on our ABL facility are generally paid down with cash provided by our operating activities. During fiscal year 2025, the weighted average interest rate on our borrowings under the ABL facility was 5.7%.

We are currently in compliance with the agreements and instruments governing our debt, including our financial covenants.

See Note 11 of the Notes to Consolidated Financial Statements in Item 8 contained in this Annual Report for additional information about our debt.

Guarantor Financial Information

Our 2032 Senior Notes were issued by our wholly-owned subsidiaries, Sally Holdings and Sally Capital Inc. (the “Issuers”). The notes are unsecured debt instruments guaranteed by us and certain of our wholly-owned domestic subsidiaries (together, the “Guarantors”) and have certain restrictions on the ability of our subsidiaries to make certain restrictive payments or otherwise transfer assets to us. The guarantees are joint and several, and full and unconditional. Certain other subsidiaries, including our foreign subsidiaries, do not serve as guarantors.

The following summarized consolidated financial information represents financial information for the Issuers and the Guarantors on a combined basis. All transactions and intercompany balances between these combined entities have been eliminated.

- 35 -

The following table presents the summarized balance sheets information for the Issuers and the Guarantors as of September 30, 2025 and 2024 (in thousands):

(in thousands)

September 30, 2025

September 30, 2024

Cash and cash equivalents

$

85,360

$

32,817

Inventory

$

721,975

$

781,512

Current assets

$

927,667

$

914,686

Total assets

$

2,177,968

$

2,085,179

Intercompany payable

$

15,117

$

6,939

Current liabilities

$

474,079

$

479,052

Total liabilities

$

1,883,754

$

1,951,874

The following table presents the summarized statement of earnings information for fiscal year 2025 (in thousands):

Net sales

$

2,991,244

Gross profit

$

1,568,101

Earnings before provision for income taxes

$

242,194

Net Earnings

$

180,555

Contractual Obligations

The following table summarizes our contractual obligations at September 30, 2025 (in thousands):

Payments Due by Period

Less than

1 year

1-3 years

3-5 years

More than

5 years

Total

Long-term debt obligations, including interest(a)

$

60,673

$

120,637

$

365,836

$

657,375

$

1,204,521

Obligations under operating leases(b)

181,034

287,847

161,952

253,220

884,053

Purchase obligations(c)

37,504

48,067

12,841

—

98,412

Other long-term obligations(d)(e)

7,010

6,488

1,979

2,293

17,770

Total

$

286,221

$

463,039

$

542,608

$

912,888

$

2,204,756

(a)
Long-term debt obligations include future interest payments on our debt outstanding as of September 30, 2025. The amounts shown above do not include deferred debt issuance costs reflected in our consolidated balance sheets, nor do they include the impact of any interest paid or received from the impact of our interest rate swap.

(b)
The amounts reported for operating leases do not include common area maintenance (CAM), property taxes or other executory costs. The amounts shown above do not include immaterial contingent liabilities for operating leases for which we are liable in the event of default by a franchisee.

(c)
Purchase obligations reflect legally binding agreements that are entered into by us to purchase goods or services, that specify minimum quantities to be purchased and with fixed or variable price provisions. Amounts shown do not reflect open purchase orders, mainly for merchandise, to be fulfilled within one year, which are generally cancellable or contracts that tend to be reoccurring in nature and similar in amount year over year.

(d)
Other long-term obligations, including current portion, principally represent obligations under our insurance and self-insurance programs. These obligations are included in accrued liabilities and other liabilities, as appropriate, in our consolidated balance sheets.

(e)
The table above does not include an estimated $9.5 million of unrecognized tax benefits due to uncertainty regarding the realization and timing of the related future cash flows, if any.

- 36 -

The information contained in the table above with regards to our long-term debt obligations is based on the current terms of such debt obligations and does not reflect any assumptions about our ability or intent to refinance any of our debt either on or before their maturity. In the event we refinance some or all of the debt either on or before maturity, actual payments for some of the periods shown may differ materially from the amounts reported herein. In addition, other future events, including potential increases in interest rates, could cause actual payments to differ materially from these amounts.

Off-Balance Sheet Financing Arrangements

At September 30, 2025, we did not have any off-balance sheet financing arrangements other than obligations under letters of credit, as discussed above.

Critical Accounting Estimates

The preparation of our consolidated financial statements in accordance with generally accepted accounting principles in the United States (“GAAP”) requires us to make estimates, judgments and assumptions that affect the reported amounts of assets, liabilities, revenues, expenses and disclosures. Actual results could differ from the estimates and assumptions used, which could have a material impact on financial statements. We believe the following are our most critical accounting estimates that require subjective judgments, estimates and assumptions:

Vendor Rebates and Concessions

We deem cash consideration received from a vendor to be a reduction of the cost of goods sold unless it is in exchange for an asset or service, or a reimbursement of a specific, incremental, identifiable cost incurred by us in selling the vendor’s products. The majority of cash consideration we receive is considered to be a reduction of the cost of inventory and a subsequent reduction in cost of goods sold as the related products are sold. We consider the facts and circumstances of the various contractual agreements with vendors in order to determine the appropriate classification of amounts received in our consolidated statements of earnings. We record cash consideration expected to be received from vendors in accounts receivables, other when earned and at the amount we believe will be collected. These receivables could be significantly affected if the actual amounts subsequently collected differ from our expectations. Historically, adjustments between the amount recorded and the amount collected have not had a material impact on our results of operations.

Income Taxes

We record income tax provisions in our consolidated financial statements based on an estimate of current income tax liabilities. The development of these provisions requires judgments about tax positions, potential outcomes and timing. If we prevail in tax matters for which provisions have been established or are required to settle matters in excess of established provisions, our effective tax rate for a particular period could be significantly affected.

Additionally, deferred income taxes are recognized for the future tax consequences attributable to differences between our financial statement carrying amounts of assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which temporary differences are estimated to be recovered or settled. We believe it is more-likely-than-not that our results of operations in the future will generate sufficient taxable income to realize our deferred tax assets, net of the valuation allowance currently recorded. We have recorded a valuation allowance to account for uncertainties regarding the recoverability of certain deferred tax assets, primarily foreign loss carryforwards and tax credit carryforwards. In the future, if we determine certain deferred tax assets will not be realizable, the related adjustments could significantly affect our effective tax rate at that time. An estimated tax benefit related to an uncertain tax position is recorded in our consolidated financial statements only after determining a more-likely-than-not probability that the uncertain tax position will withstand challenge, if any, from applicable taxing authorities.

Assessment of Long-Lived Assets for Impairment

We review long-lived assets, including operating lease assets, for impairment whenever events or circumstances indicate the carrying amount of an asset may not be fully recoverable based on estimated undiscounted future cash flows. Long-lived assets are reviewed at the lowest level of identifiable cash flows, which typically is at the store level. In assessing for impairment, we determine the fair value of each individual store by discounting projected future cash flows. There are certain estimates and assumptions used to arrive at estimated future cash flows, including projected earnings and growth rates. The carrying amount of a long-lived asset or asset group is considered impaired

- 37 -

when the carrying value of the asset or asset group exceeds the expected future cash flows from the asset or asset group. The impairment loss recognized is the excess of the carrying value of the asset or asset group over its fair value.

When we commit to an exit plan of scale that we believe will result in the disposal of long-lived assets prior to the end of their useful lives, the approval of such plan may be considered a triggering event and therefore require a reassessment of asset carrying values for recoverability, based on projected cash flows. If the carrying values are not recoverable, write-downs or impairment charges may be required to bring carrying values of certain long-lived assets, including operating lease assets, to fair value. In connection with facility and store closures, we typically will also incur charges for employee severance, disposal costs and other expenses incurred with closures. These charges are accrued and estimated based on facts and circumstances at the time. Actual cash flows and expected payments could be significantly different from our estimates. No material impairment losses were recognized for fiscal year 2025, 2024 or 2023.

Assessment of Goodwill and Intangible Assets for Impairment

We review goodwill and intangible assets for impairment annually, or when events or circumstances indicate it is more-likely-than-not that the value of the asset may be impaired. In assessing these types of assets for impairment, there are significant estimates and assumptions used to determine the fair value, including relevant market and economic conditions, anticipated future revenues and cash flows, royalty rates and discount rates.

When assessing goodwill for impairment, we may perform a qualitative assessment which evaluates macro-economic conditions, current and projected cash flows, and other events or changes in circumstances to determine if a quantitative assessment is necessary. During quantitative assessment, we use a discounted cash flow model to determine an estimated fair value. If it is determined that the fair value of a reporting unit is less than its carrying value, an impairment charge will be recorded to bring the carrying value down to its fair value.

During fiscal year 2025, we determined that no triggering events had occurred, as both internal and external facts and circumstances, including revenues in fiscal year 2025 versus prior projections and prior weighted-average cost of capital, continued to see improvement from the end of September 2023, the last time we performed a quantitative analysis. At the end of September 2023, we determined that a triggering event had occurred, due to the decline in the Company's share price and market capitalization at the end of fiscal year 2023, among other factors. As a result, we conducted a quantitative assessment at September 30, 2023 and determined that no impairment existed for our Sally or BSG reporting units.

Like goodwill, our indefinite-lived intangible assets are tested for impairment by comparing the fair value of each asset to its carrying value, but only if a triggering event exists. As of September 30, 2025, our indefinite-lived assets were comprised of only trade names. To determine the fair value of each trade name, we use the relief-from-royalty method, which estimates what a third-party would be willing to pay in royalties to receive a benefit from the use of the asset. If it is determined the asset’s fair value is less than its carrying value, then an impairment charge is recorded to reduce the carrying value down to its fair value. During fiscal year 2025, certain trade names within Sally were fully impaired due to the decrease in projected revenues from a specific product line and we recognized an impairment loss of $4.5 million. No impairment losses were recognized in fiscal years 2024 or 2023.

Recent Accounting Pronouncements

See Note 2 of the Notes to Consolidated Financial Statements in Item 8 — “Financial Statements and Supplementary Data” contained elsewhere in this Annual Report for information about recent accounting pronouncements.