Sally Beauty Holdings, Inc. Q1 FY2026 earnings call

• First quarter financial performance was strong with total sales of $943 million, comparable sales flat, adjusted operating income at high end of expectations, and adjusted diluted earnings per share above guidance.
• Sally segment: US and Canada business had positive comparable sales growth of 1.3%, exited lower margin European full-service operations (modest sales headwind but not material to operating profit), core color category up 8%, fragrance entry met with positive response, ecommerce sales up 20%.
• BSG segment: Top-line results roughly flat, stylists cautious in spending, but key categories and brands showed growth.
• Strategies: Understanding and activating customers through campaigns, personalization, and licensed platforms; unlocking digital value with ecommerce growth and app upgrades; differentiating with product assortment and innovation in fragrance, own brands, and new launches; accelerating new growth pathways with Sally Ignited store refreshes and BSG skin/spa category testing.
• Fuel for Growth program: On track to capture $45 million benefits in fiscal 2026, cumulative run rate savings to $120 million by end of fiscal 2026.

Sally Beauty net sales increased 1.2% to $532 million, with comparable sales essentially flat, color up 8%, and ecommerce sales up 20% to $50 million (9% of segment net sales). Gross margin in the Sally segment increased 20 basis points to 59.8%. BSG segment net sales totaled $412 million, down 20 basis points, comparable sales flat, color up 4%, and ecommerce sales up 4% to $60 million (15% of segment net sales). Gross margin at BSG expanded 90 basis points to 40.2%.

• Fiscal 2026: Consolidated net sales range $3.71-$3.77 billion (50 basis points favorable foreign currency impact), comparable sales flat to up 1%, adjusted operating earnings $328-$342 million, adjusted diluted EPS $2.02-$2.10. Capital expenditures ~$100 million, free cash flow $200 million. Store count flat (40 new, 40 closures, 50 relocations).
• Q2 2026: Consolidated net sales range $895-$905 million (100 basis points favorable foreign currency impact), comparable sales up 0.5%-1.5%, adjusted operating earnings $68-$71 million, adjusted diluted EPS $0.39-$0.42. SG&A expected relatively consistent from Q1 to Q2.

Q: On the BSG customer relative to the Sally customer, trends and health of consumers; thoughts on fragrance and other categories as percentage of sales over time, and timing of rolling out Sally Ignited.

A: Denise Paulonis discussed BSG customer being value-focused, Sally customer resilient despite government shutdown, fragrance well-received in Sally with expansion planned, and Sally Ignited stores showing positive KPIs with focus on honing the model in FY 2026 before potential acceleration in FY 2027.

Q: How promotional environment was over holiday vs expectations, and thoughts on promotions heading into Q2 and rest of year.

A: Denise Paulonis said promotional levels up slightly year over year, but focused on right messaging about value, and not expecting highly promotional Q2.

Q: Q2 outlook context, comparing to last year's weak comp and EPS; context on comp guidance and why it could be better.

A: Denise Paulonis explained Q2 is lapping a soft quarter last year, with momentum from Sally initiatives and BSG color strength, and potential upside from tax refunds and new categories.

Q: Short term Q2 outlook context, illness impact, and trends on salon consumer.

A: Denise Paulonis noted Q2 is lapping softest quarter of last year, business performing well on both sides, and salon consumers likely to stay busy with trends in glass and super straight looks.

Q: Category growth expectations, changes since last chat, and trends on salon consumer visit frequency.

A: Denise Paulonis said color strength continues, care category softer but subcategories like serums performing well, and salon consumers had pullback due to government shutdown, with trends in straightening looks.

Q: Q2 comp guide and second half trends, and Sally Ignited comp run rate.

A: Denise Paulonis said Q2 comp guide reflects easier comps from last year, second half optimistic with continued growth from initiatives, and Sally Ignited stores showing positive KPIs with potential for future rollout expansion.