Sally Beauty Holdings ended fiscal 2026 with modest sales growth and stronger per-share earnings, reporting higher fourth-quarter operating income and double-digit growth in adjusted earnings per share. For the full year, sales rose less than 1%, while adjusted EPS increased 9%.
The beauty-products retailer also reported $323 million in operating cash flow for the year, which it used to repay debt, repurchase shares and invest in the business. It said its fiscal 2027 outlook is consistent with its financial algorithm, but the announcement text provided here does not include specific guidance ranges.
Fourth quarter
- Net sales rose 0.6% from a year earlier to $953 million. Comparable sales increased 0.9%.
- E-commerce sales grew 8% to $113 million, equal to 12% of total sales.
- Gross margin was 51.9%, down 0.3 percentage point from the prior-year quarter.
- GAAP operating earnings were $92 million, with a 9.7% operating margin. The margin increased 1.3 percentage points year over year.
- Adjusted operating earnings were $95 million, and the adjusted operating margin rose 0.6 percentage point to 10.0%.
- GAAP diluted EPS increased 22% to $0.60. Adjusted diluted EPS rose 13% to $0.62.
- Operating cash flow was $75 million and free cash flow was $47 million.
- Sally Beauty repaid $20 million of term-loan debt and spent $42 million to repurchase 2.6 million shares during the quarter.
Full fiscal year
- Net sales increased 0.9% to $3.73 billion; comparable sales grew 0.5%.
- E-commerce sales rose 10% to $441 million, or 12% of total sales.
- GAAP gross margin was 52.0%. Adjusted gross margin expanded 0.4 percentage point to 52.1%.
- GAAP operating earnings were $326 million, and operating margin fell 0.2 percentage point to 8.7%. Adjusted operating earnings were $334 million, with adjusted margin up 0.1 percentage point to 9.0%.
- GAAP diluted EPS rose 7% to $2.02; adjusted diluted EPS increased 9% to $2.08.
- Operating cash flow totaled $323 million and free cash flow was $210 million.
- The company repaid $80 million of term-loan debt and repurchased $113 million of shares during the year.
Cash, capital allocation and strategy
At September 30, Sally Beauty had $158 million in cash and no borrowings under its asset-based revolving credit line. Inventory was $1.00 billion, up 1% from a year earlier.
Chief Executive Denise Paulonis said the company’s priorities include expanding digital and omnichannel capabilities, attracting new customers, developing products and deepening customer engagement. She said the focus for fiscal 2027 is to scale those growth platforms while pursuing profitable growth.
The results show modest top-line growth alongside higher annual EPS and adjusted operating margin. The company also used cash for both debt reduction and share repurchases, while ending the year with cash on hand and no revolving-credit borrowings.