Sally Beauty Holdings Inc (NYSE:SBH) reported third-quarter earnings on Tuesday that surpassed analyst expectations, driven by margin improvements fueled by cost-cutting efforts despite a slight dip in sales.
The professional hair color retailer posted adjusted earnings of $0.51 per share for the quarter ended June 30, well above the $0.43 consensus. Revenue totaled $933 million, slightly exceeding the $928.78 million forecast but down 1.0% year-over-year. Comparable sales declined by 0.4%. Shares jumped 5.3% following the results.
This quarter marked the fourth straight period of operating margin expansion for Sally Beauty, with adjusted operating margin rising 30 basis points to 9.2%. The company’s “Fuel for Growth” initiative has played a key role in enhancing profitability, contributing to a 13% increase in adjusted earnings per share versus last year.
“Our third quarter results, including improved topline trends and solid year-over-year growth in operating profit, showcase the resilience of our business and the customer service focus of our team,” said Denise Paulonis, president and CEO.
The e-commerce segment remained robust, with digital sales hitting $99 million, representing 10.6% of total net sales. The Beauty Systems Group segment also showed strength, posting a 0.5% increase in comparable sales thanks to wider distribution and new brand innovation.
During the quarter, Sally Beauty bolstered its financial position by generating $69.4 million in cash flow from operations and repaying $21 million in term loan debt. The company also bought back 1.5 million shares at a total cost of $13 million.
Reflecting the strong performance, Sally Beauty raised its full-year adjusted operating margin guidance to 8.6%-8.7%, up from the previous 8.0%-8.5% range. The company also updated its comparable sales outlook to roughly flat, at the high end of its prior forecast.
Sally Beauty Holdings stock price
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