Sally Beauty Holdings, Inc. (NYSE:SBH) shares dropped more than 6% in premarket trading on Monday after the company posted better-than-expected first-quarter results but issued second-quarter guidance that fell short of market forecasts.
The professional hair color retailer reported first-quarter adjusted earnings of $0.48 per share, ahead of analyst expectations of $0.46. Revenue totaled $943 million, narrowly beating the $939.63 million consensus estimate. Consolidated comparable sales were flat year over year, while consolidated net sales increased 0.6%.
Despite the quarterly beat, investor attention centered on the company’s weaker outlook for the second quarter. Sally Beauty expects earnings of $0.39 to $0.42 per share, below the $0.45 consensus, with revenue projected in the range of $895 million to $905 million.
“Our first quarter performance marks a strong start to fiscal 2026,” said Denise Paulonis, president and chief executive officer. “We achieved top line results that met our expectations, maintained healthy gross margins and delivered adjusted EPS growth of 12% – consistent with our long-term financial algorithm.”
During the quarter, adjusted gross margin expanded by 50 basis points to 51.3%, and the company generated $93 million in operating cash flow. E-commerce sales reached $111 million, accounting for 11.7% of net sales.
For the full fiscal year 2026, Sally Beauty lifted the lower end of its earnings guidance to $2.02 to $2.10 per share, while keeping its revenue outlook unchanged at $3.71 billion to $3.77 billion.
The company also continued executing its capital allocation strategy, repaying $20 million of term loan debt and repurchasing 1.4 million shares for a total of $21 million. At quarter-end, Sally Beauty reported a net debt leverage ratio of 1.5x and cash and cash equivalents of $157 million.