Consolidated Net Sales Increase 0.7% for Sally Beauty Holdings in Q1 2025

Consolidated net sales increased 0.7% to $937.9 million for Sally Beauty Holdings in Q1 2025.

Consolidated comparable sales increased 1.6% while GAAP operating margin expanded 330 basis points to 10.7% and adjusted operating margin expanded 50 basis points to 8.4%. Consolidated gross profit for the first quarter was $476.8 million compared to $467.2 million in the prior year, an increase of 2.1%. Consolidated GAAP gross margin was 50.8%, an increase of 60 basis points, compared to 50.2% in the prior year, driven primarily by lower shrink expense and lower distribution and freight costs from supply chain efficiencies.

“We are pleased to start fiscal 2025 with solid first quarter results, reflecting continued momentum across both our Sally Beauty and Beauty Systems Group segments,” said Denise Paulonis, president and chief executive officer. “Consistent, high-quality execution of our strategic initiatives is driving our performance. Q1 marks a third consecutive quarter of comparable sales growth across both business units as well as a second consecutive quarter of increased profitability and adjusted operating margin expansion. Additionally, we deployed our cash flow towards investing in our strategic initiatives, further reducing our debt levels, and returning value to shareholders through our share repurchase program.”

First Quarter Segment Results

Segment net sales were $525.4 million in the quarter, an increase of 0.4% compared to the prior year. The company said the segment had an unfavorable impact of 90 basis points from foreign currency translation on reported sales and operated 20 fewer stores at the end of the quarter compared to the prior year. At constant currency, segment e-commerce sales were $41 million, or 7.9% of segment net sales, for the quarter. Segment comparable sales increased 1.7% in the first quarter, primarily reflecting strong growth in hair color and digital marketplaces.

At the end of the quarter, segment store count was 3,123. GAAP gross margin increased by 100 basis points to 59.6% compared to the prior year. The increase was driven primarily by higher product margin resulting from enhanced promotional strategies and benefits from the fuel for growth initiative, and lower shrink expense. GAAP operating earnings were $79.9 million compared to $77.6 million in the prior year, representing an increase of 2.9%. GAAP operating margin increased to 15.2% compared to 14.8% in the prior year.

Beauty Systems Group

Segment net sales were $412.4 million in the quarter, an increase of 1.1% compared to the prior year. The segment had an unfavorable impact of 20 basis points on reported sales from foreign currency translation and operated 2 fewer stores at the end of the quarter compared to the prior year. At constant currency, segment e-commerce sales were $58 million, or 14.0% of segment net sales, for the quarter.
Segment comparable sales increased 1.4% in the first quarter, primarily reflecting the continued momentum at Beauty Systems Group from innovation and expanded distribution.

At the end of the quarter, segment store count was 1,330. GAAP gross margin increased 30 basis points to 39.7% in the quarter compared to the prior year, driven primarily by lower distribution and freight costs from supply chain efficiencies and lower shrink expense, partially offset by lower product margin related to brand mix.

GAAP operating earnings were $50.5 million compared to $44.6 million in the prior year, representing an increase of 13.1%. GAAP operating margin in the quarter was 12.2% compared to 10.9% in the prior year.
At the end of the quarter, there were 639 distributor sales consultants compared to 656 in the prior year.

Q2 and FY 2025 Guidance

Comparable sales for Q2 2025 are expected to be approximately flat compared to the prior year. Consolidated net sales are expected to be approximately 100 basis points lower than comparable sales due to the expected unfavorable impact from foreign exchange rates. Adjusted Operating Margin is expected to be in the range of 8.0% to 8.3%

For FY 2025, comparable sales are expected to be flat to up 2% compared to the prior year and Adjusted Operating Margin is expected to be in the range of 8.5% to 9.0%. Consolidated net sales are now expected to be approximately 100 basis points lower than comparable sales due to the expected unfavorable impact from foreign exchange rates.