Sally Beauty 2025 Q3 Earnings Net Income Surges 21.2%

Sally Beauty (SBH) reported its fiscal 2025 Q3 earnings on Aug 05th, 2025, delivering a net income of $45.72 million, up 21.2% year-over-year, and raising full-year adjusted operating margin guidance. Despite a 1.0% decline in total revenue, the company’s strong cost controls and margin expansion led to a 24.3% increase in EPS to $0.46. The firm also repurchased shares and strengthened its balance sheet, with operating free cash flow reaching $49.1 million.

Revenue
Sally Beauty’s total revenue for fiscal 2025 Q3 declined by 1.0% year-over-year to $933.31 million, compared to $942.34 million in the prior year. The Sally Beauty Supply segment reported a 1.8% drop in revenue to $526.8 million, attributed to 32 fewer stores and weaker comparable sales. Meanwhile, the Beauty Systems Group segment saw a slight increase of 0.2%, with revenue reaching $406.5 million, driven by 0.5% growth in comparable sales and improved performance in new product innovation and distribution.

Earnings/Net Income
Sally Beauty’s net income surged 21.2% year-over-year to $45.72 million in fiscal 2025 Q3, compared to $37.72 million in the same period last year. Earnings per share (EPS) rose 24.3% to $0.46, up from $0.37 in fiscal 2024 Q3. This strong performance was underpinned by a 100 basis point increase in adjusted gross margin to 52.0% and a 30 basis point expansion in adjusted operating margin to 9.2%. The company has now posted profitability for 19 consecutive years in this fiscal quarter, demonstrating its resilience and strategic efficiency.

Price Action
Following the earnings report, Sally Beauty’s stock price saw a notable rally. Shares rose 5.81% on the latest trading day, surged 14.76% during the previous full trading week, and climbed 13.42% month-to-date. However, the post-earnings price action suggests mixed investor sentiment: a strategy of buying the stock when earnings beat and holding for 30 days would have led to a -4.23% return, underperforming the benchmark by the same margin. The strategy recorded a maximum drawdown of 0.00% and a Sharpe ratio of -0.02, indicating low risk but negative returns.

CEO Commentary
Denise Paulonis, President and CEO of Sally Beauty, emphasized the company’s resilience and strong operational performance. She highlighted the “fuel for growth” initiative and continued financial discipline, which drove double-digit EPS growth and a fourth consecutive quarter of adjusted operating margin expansion. Paulonis also noted the company’s progress on strategic pillars, including improved topline trends and margin expansion, despite macroeconomic challenges.

Guidance
Sally Beauty has raised its full-year fiscal 2025 adjusted operating margin guidance and adjusted comparable sales outlook. The company now expects an adjusted operating margin range of 8.6% to 8.7%, up from the previous 8.0% to 8.5%. The updated outlook reflects stronger third-quarter performance and strategic execution, with the company operating approximately 30 fewer stores and facing expected foreign exchange headwinds.

Additional News
In the weeks following the earnings release, Sally Beauty announced the sale of its corporate headquarters in Denton, Texas, for a $26.6 million gain. The company also executed a share repurchase program, repurchasing 1.5 million shares at a cost of $13 million, and completed a $21 million repayment of term loan B debt. Additionally, Sally Beauty’s 5.625% Senior Notes due 2025 were repaid, leading to a loss on debt extinguishment due to the write-off of unamortized deferred financing costs. These actions underscore the company’s focus on strengthening its balance sheet and optimizing capital allocation.