Sally Beauty Narrows FY25 Comparable Sales View to Flat, Expects Net Sales to be 75 Basis Points Lower Than Comparable Sales Due to Foreign Exchange Rates and Fewer Stores.

Sally Beauty has narrowed its FY25 comparable sales view to flat from flat to (1%). Net sales are expected to be approximately 75 basis points lower due to foreign exchange rates and fewer stores. Consensus revenue for FY25 is $3.68B, down from FY24 revenue of $3.72B.

Beauty supply retailer Sally Beauty Holdings Inc. (NYSE: SBH) has revised its fiscal year 2025 (FY25) comparable sales view to flat, down from a previously projected range of flat to (1%) [1]. The company expects its net sales to be approximately 75 basis points lower due to the unfavorable impact from foreign exchange rates and the closure of around 30 fewer stores compared to the prior year [2]. The adjusted operating margin is projected to be in the range of 8.6% to 8.7%, up from the previous estimate of 8.0% to 8.5% [1].

Sally Beauty's Q2 CY2025 revenue was $933.3 million, which was flat year on year and in line with Wall Street's expectations [3]. The company's non-GAAP profit of $0.51 per share was 21.4% above analysts' consensus estimates. The adjusted operating margin was 8.4%, the same as the prior year's figure, and the free cash flow margin improved to 5.3% from 3.1% in the same quarter last year [3].

Looking ahead, sell-side analysts expect revenue to remain flat over the next 12 months. Although this projection implies that newer products will drive better top-line performance, it is still below average for the sector. The number of stores Sally Beauty operates has been decreasing, with the latest quarter reporting 35 locations, down from 4,460 in the same quarter last year [3]. The company has been closing stores, averaging 13.6% annual declines over the last two years [3].

Sally Beauty's revenue growth has been stagnant, with the company's $3.69 billion in sales for the trailing 12 months close to its revenue six years ago. This stagnation is attributed to store closures, which have been a significant factor in the company's recent performance [3]. The company's revenue growth has been below average for the sector, with analysts expecting revenue to remain flat over the next 12 months [3].

In summary, Sally Beauty has revised its FY25 comparable sales view to flat, citing the impact of foreign exchange rates and fewer stores. The company's Q2 CY2025 revenue was flat year on year, and its non-GAAP profit per share exceeded analysts' expectations. The company's adjusted operating margin is projected to be in the range of 8.6% to 8.7%, up from the previous estimate. However, the company's revenue growth has been stagnant, with analysts expecting revenue to remain flat over the next 12 months.

References:
[1] https://seekingalpha.com/news/4478229-sally-beauty-non-gaap-eps-of-0_51-revenue-of-933m
[2] https://finance.yahoo.com/news/sally-beauty-nyse-sbh-q2-112339217.html
[3] https://ca.finance.yahoo.com/quote/SBH/news/