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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED: JUNE 30, 2025


☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File No. 1-33145

SALLY BEAUTY HOLDINGS, INC.

(Exact name of registrant as specified in its charter)


Delaware		36-2257936
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

3001 Colorado Boulevard
Denton, Texas		76210
(Address of principal executive offices)		(Zip Code)

(800) 777-5706

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol	Name of each exchange on which registered
Common Stock, $0.01 par value	SBH	The New York Stock Exchange

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☒	Accelerated filer	☐	Non-accelerated filer	☐
Smaller reporting company	☐	Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Number of shares of common stock outstanding as of July 31, 2025: 98,944,792.

TABLE OF CONTENTS


	Page
PART I — FINANCIAL INFORMATION

Item 1. Financial Statements	4

Condensed Consolidated Balance Sheets	4
Condensed Consolidated Statements of Earnings	5
Condensed Consolidated Statements of Comprehensive Income	6
Condensed Consolidated Statements of Stockholders’ Equity	7
Condensed Consolidated Statements of Cash Flows	8
Notes to Condensed Consolidated Financial Statements	9

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	16
Item 3. Quantitative and Qualitative Disclosures About Market Risk	23
Item 4. Controls and Procedures	23

PART II — OTHER INFORMATION

Item 1. Legal Proceedings	24
Item 1A. Risk Factors	24
Item 2. Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities.	24
Item 5. Other Information	24
Item 6. Exhibits	25

In this Quarterly Report, references to the "Company,” “Sally Beauty,” “our company,” “we,” “our,” “ours” and “us” refer to Sally Beauty Holdings, Inc. and its consolidated subsidiaries unless otherwise indicated or the context otherwise requires.

cautionary notice regarding forward-looking statements

Statements in this Quarterly Report on Form 10-Q and in the documents incorporated by reference herein that are not purely historical facts or that depend upon future events may constitute forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, (the "Exchange Act"). Words such as “anticipate,” “believe,” “estimate,” “expect,” “intend,” “plan,” “project,” “target,” “can,” “could,” “may,” “should,” “will,” “would,” or similar expressions may also identify such forward-looking statements.

Readers are cautioned not to place undue reliance on forward-looking statements as such statements speak only as of the date they were made and involve risks and uncertainties that could cause actual events or results to differ materially from the events or results described in the forward-looking statements. The most important factors that could cause our actual results to differ from our forward-looking statements are set forth in our description of risk factors in Item 1A contained in our Annual Report on Form 10-K for the fiscal year ended September 30, 2024, which should be read in conjunction with the forward-looking statements in this report. Forward-looking statements speak only as of the date they are made, and we do not undertake any obligation to update any forward-looking statement.

The events described in the forward-looking statements might not occur or might occur to a different extent or at a different time than we have described. As a result, our actual results may differ materially from the results contemplated by these forward-looking statements.

PART I — FINANCIAL INFORMATION

Item 1. Financial Statements.

SALLY BEAUTY HOLDINGS, INC. AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

(In thousands, except par value data)


	June 30, 2025			September 30, 2024
	(Unaudited)
Assets
Current assets:
Cash and cash equivalents	$	112,800		$	107,961
Trade accounts receivable, net		29,743			33,635
Accounts receivable, other		66,214			58,553
Inventory		1,005,365			1,036,624
Other current assets		47,522			68,541
Total current assets		1,261,644			1,305,314
Property and equipment, net of accumulated depreciation of $923,072 at June 30, 2025, and $881,818 at September 30, 2024		256,472			269,872
Operating lease assets		589,960			582,573
Goodwill		540,985			538,266
Intangible assets, excluding goodwill, net of accumulated amortization of $23,010 at June 30, 2025, and $33,761 at September 30, 2024		56,180			59,960
Other assets		38,859			36,914
Total assets	$	2,744,100		$	2,792,899
Liabilities and Stockholders’ Equity
Current liabilities:
Current maturities of long-term debt	$	4,000		$	4,127
Accounts payable		193,040			269,424
Accrued liabilities		165,291			162,950
Current operating lease liabilities		155,591			136,068
Income taxes payable		5,920			20,100
Total current liabilities		523,842			592,669
Long-term debt		882,383			978,255
Long-term operating lease liabilities		468,998			479,616
Other liabilities		20,874			22,066
Deferred income tax liabilities, net		85,094			91,758
Total liabilities		1,981,191			2,164,364
Stockholders’ equity:
Common stock, $0.01 par value. Authorized 500,000 shares; 99,438 and 101,854 shares issued and shares outstanding at June 30, 2025, and September 30, 2024, respectively		994			1,019
Preferred stock, $0.01 par value. Authorized 50,000 shares; none issued		—			—
Accumulated earnings		863,251			740,685
Accumulated other comprehensive loss, net of tax		(101,336	)		(113,169	)
Total stockholders’ equity		762,909			628,535
Total liabilities and stockholders’ equity	$	2,744,100		$	2,792,899

The accompanying notes are an integral part of these condensed consolidated financial statements.

SALLY BEAUTY HOLDINGS, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Earnings

(In thousands, except per share data)

(Unaudited)


	Three Months Ended				Nine Months Ended
	June 30,				June 30,
	2025		2024		2025		2024
Net sales	$	933,307	$	942,340	$	2,754,348	$	2,782,003
Cost of goods sold		452,322		461,457		1,337,706		1,370,872
Gross profit		480,985		480,883		1,416,642		1,411,131
Selling, general and administrative expenses		402,812		408,730		1,168,776		1,210,303
Restructuring		—		383		—		361
Operating earnings		78,173		71,770		247,866		200,467
Interest expense		15,709		20,707		49,440		58,544
Earnings before provision for income taxes		62,464		51,063		198,426		141,923
Provision for income taxes		16,740		13,339		52,479		36,565
Net earnings	$	45,724	$	37,724	$	145,947	$	105,358
Earnings per share:
Basic	$	0.46	$	0.37	$	1.44	$	1.01
Diluted	$	0.44	$	0.36	$	1.40	$	0.98
Weighted-average shares:
Basic		100,463		103,190		101,367		104,477
Diluted		103,239		105,897		104,187		107,186

The accompanying notes are an integral part of these condensed consolidated financial statements.

SALLY BEAUTY HOLDINGS, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Comprehensive Income

(In thousands)

(Unaudited)


	Three Months Ended						Nine Months Ended
	June 30,						June 30,
	2025			2024			2025			2024
Net earnings	$	45,724		$	37,724		$	145,947		$	105,358
Other comprehensive income (loss):
Foreign currency translation adjustments		27,174			(5,955	)		11,350			1,494
Interest rate swap, net of tax		(41	)		46			703			(1,458	)
Foreign exchange contracts, net of tax		(1,122	)		887			(220	)		874
Other comprehensive income (loss), net of tax		26,011			(5,022	)		11,833			910
Total comprehensive income	$	71,735		$	32,702		$	157,780		$	106,268

The accompanying notes are an integral part of these condensed consolidated financial statements.

SALLY BEAUTY HOLDINGS, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Stockholders’ Equity

(In thousands)

(Unaudited)


													Accumulated
							Additional						Other			Total
	Common Stock						Paid-in			Accumulated			Comprehensive			Stockholders’
	Shares			Amount			Capital			Earnings			Loss			Equity
Balance at September 30, 2024		101,854		$	1,019		$	—		$	740,685		$	(113,169	)	$	628,535
Net earnings		—			—			—			61,013			—			61,013
Other comprehensive loss		—			—			—			—			(23,981	)		(23,981	)
Share-based compensation		—			—			6,053			—			—			6,053
Stock issued for equity awards		1,162			12			69			—			—			81
Employee withholding taxes paid related to net share settlement		(392	)		(4	)		(5,260	)		—			—			(5,264	)
Repurchases and cancellations of common stock		(753	)		(8	)		(862	)		(9,078	)		—			(9,948	)
Balance at December 31, 2024		101,871		$	1,019		$	—		$	792,620		$	(137,150	)	$	656,489
Net earnings		—			—			—			39,210			—			39,210
Other comprehensive income		—			—			—			—			9,803			9,803
Share-based compensation		—			—			4,238			—			—			4,238
Stock issued for equity awards		112			1			321			—			—			322
Employee withholding taxes paid related to net share settlement		(1	)		—			(7	)		—			—			(7	)
Repurchases and cancellations of common stock		(1,088	)		(11	)		(4,552	)		(5,676	)		—			(10,239	)
Balance at March 31, 2025		100,894		$	1,009		$	—		$	826,154		$	(127,347	)	$	699,816
Net earnings		—			—			—			45,724			—			45,724
Other comprehensive income		—			—			—			—			26,011			26,011
Share-based compensation		—			—			4,509			—			—			4,509
Repurchases and cancellations of common stock		(1,456	)		(15	)		(4,509	)		(8,627	)		—			(13,151	)
Balance at June 30, 2025		99,438		$	994		$	—		$	863,251		$	(101,336	)	$	762,909


													Accumulated
							Additional						Other			Total
	Common Stock						Paid-in			Accumulated			Comprehensive			Stockholders’
	Shares			Amount			Capital			Earnings			Loss			Equity
Balance at September 30, 2023		106,266		$	1,063		$	5,677		$	624,772		$	(122,764	)	$	508,748
Net earnings		—			—			—			38,390			—			38,390
Other comprehensive income		—			—			—			—			10,808			10,808
Share-based compensation		—			—			5,118			—			—			5,118
Stock issued for equity awards		722			7			209			—			—			216
Employee withholding taxes paid related to net share settlement		(192	)		(2	)		(1,738	)		—			—			(1,740	)
Repurchases and cancellations of common stock		(1,939	)		(19	)		(9,266	)		(10,915	)		—			(20,200	)
Balance at December 31, 2023		104,857		$	1,049		$	—		$	652,247		$	(111,956	)	$	541,340
Net earnings		—			—			—			29,244			—			29,244
Other comprehensive loss		—			—			—			—			(4,876	)		(4,876	)
Share-based compensation		—			—			3,964			—			—			3,964
Stock issued for equity awards		184			2			1,396			—			—			1,398
Employee withholding taxes paid related to net share settlement		(1	)		(1	)		(19	)		—			—			(20	)
Repurchases and cancellations of common stock		(1,526	)		(15	)		(5,341	)		(14,844	)		—			(20,200	)
Balance at March 31, 2024		103,514		$	1,035		$	—		$	666,647		$	(116,832	)	$	550,850
Net earnings		—			—			—			37,724			—			37,724
Other comprehensive loss		—			—			—			—			(5,022	)		(5,022	)
Share-based compensation		—			—			4,178			—			—			4,178
Stock issued for equity awards		5			—			40			—			—			40
Repurchases and cancellations of common stock		(876	)		(9	)		(4,218	)		(5,873	)		—			(10,100	)
Balance at June 30, 2024		102,643		$	1,026		$	—		$	698,498		$	(121,854	)	$	577,670

The accompanying notes are an integral part of these condensed consolidated financial statements.

SALLY BEAUTY HOLDINGS, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)


	Nine Months Ended June 30,
	2025			2024
Cash Flows from Operating Activities:
Net earnings	$	145,947		$	105,358
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization		75,593			83,533
Share-based compensation expense		14,800			13,260
Amortization of deferred financing costs		1,609			1,872
Loss on early extinguishment of debt		943			3,734
Impairment of long-lived assets		3,222			626
Loss (gain) on disposal of equipment and other property		(26,641	)		4
Gain on divestiture of subsidiary		(768	)		—
Deferred income taxes		(6,846	)		(6,509	)
Changes in (exclusive of effects of acquisitions):
Trade accounts receivable		4,028			815
Accounts receivable, other		(6,836	)		(15,954	)
Inventory		34,193			(46,716	)
Other current assets		3,954			2,914
Other assets		506			(445	)
Operating leases, net		(10	)		(2,421	)
Accounts payable and accrued liabilities		(74,571	)		(13,615	)
Income taxes payable		(14,120	)		11,158
Other liabilities		(1,051	)		(1,759	)
Net cash provided by operating activities		153,952			135,855
Cash Flows from Investing Activities:
Payments for property and equipment		(59,271	)		(63,808	)
Proceeds from sale of property and equipment, net		43,574			—
Proceeds from divestiture of subsidiary		3,128			—
Acquisitions, net of cash acquired		(371	)		(218	)
Net cash used by investing activities		(12,940	)		(64,026	)
Cash Flows from Financing Activities:
Proceeds from issuance of long-term debt and ABL Facility		466,000			1,345,458
Repayments of long-term debt and ABL Facility		(564,122	)		(1,383,553	)
Debt issuance costs		(1,535	)		(9,135	)
Proceeds from equity awards		403			1,654
Payments for common stock repurchased		(33,338	)		(50,500	)
Employee withholding taxes paid related to net share settlement of equity awards		(5,271	)		(1,759	)
Net cash used by financing activities		(137,863	)		(97,835	)
Effect of foreign exchange rate changes on cash and cash equivalents		1,690			380
Net increase (decrease) in cash and cash equivalents		4,839			(25,626	)
Cash and cash equivalents, beginning of period		107,961			123,001
Cash and cash equivalents, end of period	$	112,800		$	97,375
Supplemental Cash Flow Information:
Interest paid	$	38,769		$	56,498
Income taxes paid	$	75,391		$	34,477
Capital expenditures incurred but not paid	$	8,480		$	9,970

The accompanying notes are an integral part of these condensed consolidated financial statements.

Sally Beauty Holdings, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

(Unaudited)

1. Significant Accounting Policies

Basis of Presentation

The unaudited condensed consolidated interim financial statements of Sally Beauty Holdings, Inc. and its subsidiaries included herein have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) and pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC"). Accordingly, certain information and note disclosures normally included in annual financial statements prepared in accordance with GAAP have been condensed or omitted, although we believe that the disclosures included herein are adequate for the interim period presented. These condensed consolidated interim financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the fiscal year ended September 30, 2024. In the opinion of management, these unaudited condensed consolidated interim financial statements reflect all adjustments that are of a normal recurring nature and that are necessary to present fairly our consolidated financial position as of June 30, 2025, and September 30, 2024, our consolidated results of operations, consolidated comprehensive income, consolidated statements of stockholders’ equity for the three and nine months ended June 30, 2025 and 2024, and consolidated cash flows for the nine months ended June 30, 2025 and 2024.

Principles of Consolidation

The unaudited condensed consolidated interim financial statements include all accounts of Sally Beauty Holdings, Inc. and its wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. All amounts are presented in U.S. Dollars.

Accounting Policies

We adhere to the same accounting policies in the preparation of our condensed consolidated interim financial statements as we do in the preparation of our full year consolidated financial statements. As permitted under GAAP, interim accounting for certain expenses, including income taxes, is based on full-year assumptions. For interim financial reporting purposes, income taxes are recorded based upon our estimated annual effective income tax.

Use of Estimates

In order to present our condensed consolidated interim financial statements in conformity with GAAP, we are required to make certain estimates and assumptions that impact our interim financial statements and supplementary disclosures. These estimates may use forecasted financial information based on reasonable assumptions available at the time of preparation; however, actual results could differ due to changes in facts and circumstances. Significant estimates and assumptions are involved in the accounting for sales allowances, deferred revenue, valuation of inventory, amortization and depreciation, intangible assets and goodwill, and other reserves. We believe these estimates and assumptions are reasonable based on management’s knowledge of current events and anticipated future actions, and changes in facts and circumstances may result in revised estimates and impact actual results. Revisions to estimates are recognized in the period in which the facts that give rise to the change become known.

2. Recent Accounting Pronouncements

In November 2023, the Financial Accounting Standards Board (“FASB”) issued accounting standards update (“ASU”) No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, to enhance segment disclosures for annual and interim consolidated financial statements, including significant segment expenses that are regularly provided to the chief operating decision maker (“CODM”). The amendments in the update are effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. The new standard is not expected to have a material impact on our consolidated financial statements; however, we expect to provide additional detail and disclosures upon adoption.

In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, to expand disclosures in an entity’s income tax rate reconciliation table and the disaggregation of taxes paid in U.S. and foreign jurisdictions. The amendments in this update are effective for annual periods beginning after December 15, 2024. Early adoption is permitted. We are currently evaluating the impact of this update, but we do not expect the update to impact our consolidated results of operations or financial position.

In November 2024, the FASB issued ASU 2024-03, Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (Subtopic 220-40), which requires, among other things, more detailed disclosure about types of expenses in commonly presented expense captions such as cost of goods sold and selling, general and administrative expenses. The update is intended to improve disclosures by providing amounts related to inventory purchases, employee compensation, depreciation, and amortization. The amendments in this update are effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal

years beginning after December 15, 2027. Early adoption is permitted, but we currently do not expect to early adopt this standard. We are currently evaluating the impact of this update to our consolidated financial statements and disclosures.

3. Revenue Recognition

Substantially all of our revenue is derived through the sale of merchandise at the point-of-sale in our stores or when products are shipped for e-commerce orders. Revenue is recognized, net of estimated sales returns and sales taxes, when control of the merchandise is transferred to the customer. We estimate sales returns based on historical data.

Changes to our contract liabilities, which are included in accrued liabilities in our condensed consolidated balance sheets, were as follows (in thousands):


	Nine Months Ended June 30,
	2025			2024
Beginning Balance	$	11,493		$	14,038
Loyalty points and gift cards issued but not redeemed, net of estimated breakage		5,904			9,266
Revenue recognized from beginning liability		(6,703	)		(11,252	)
Ending Balance	$	10,694		$	12,052

See Note 12, Segment Reporting, for additional information regarding the disaggregation of our sales revenue.

4. Fair Value Measurements

We measure on a recurring basis and disclose the fair value of our financial instruments under the provisions of ASC Topic 820, Fair Value Measurement, as amended (“ASC 820”). We define “fair value” as the price that would be received to sell an asset or paid to transfer a liability (i.e., the exit price) in an orderly transaction between market participants at the measurement date. ASC 820 establishes a three-level hierarchy for measuring fair value and requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. This valuation hierarchy is based upon the transparency of inputs used in the valuation of an asset or liability on the measurement date.

The three levels of that hierarchy are defined as follows:

Level 1 - Quoted prices are available in active markets for identical assets or liabilities;

Level 2 - Pricing inputs are other than quoted prices in active markets, included in Level 1, that are either directly or indirectly observable; and

Level 3 - Unobservable pricing inputs in which little or no market activity exists, therefore requiring an entity to develop its own model with estimates and assumptions.

Financial instruments measured at fair value on recurring basis

Consistent with the fair value hierarchy, we categorized our financial assets and liabilities as follows:


(in thousands)	Classification	Fair Value Hierarchy Level	June 30, 2025		September 30, 2024
Financial Assets:
Foreign exchange contracts
Designated cash flow hedges	Other current assets	Level 2	$	40	$	—
Non-designated cash flow hedges	Other current assets	Level 2		461		1,207
Interest rate swap	Other assets	Level 2		311		—
Total assets			$	812	$	1,207
.
Financial Liabilities:
Foreign exchange contracts
Designated cash flow hedges	Accrued liabilities	Level 2	$	338	$	—
Non-designated cash flow hedges	Accrued liabilities	Level 2		1,619		1,485
Interest rate swap	Other Liabilities	Level 2		—		635
Total liabilities			$	1,957	$	2,120

The fair value of each asset and liability was determined using widely accepted valuation techniques, including discounted cash flow analyses and observable inputs such as market interest rates and foreign exchange rates.

Other fair value disclosures

The carrying amounts, if any, of cash equivalents, trade and other accounts receivable, accounts payable, and borrowings under our $500 million asset-based senior secured loan facility (the “ABL Facility”) approximate their respective fair values due to the short-term nature of these financial instruments. The carrying amounts and corresponding estimated fair values of our long-term debt, excluding finance lease obligations, debt issuance costs, and original issue discounts, are as follows:


	Fair Value	June 30, 2025				September 30, 2024
(in thousands)	Hierarchy Level	Carrying Value		Fair Value		Carrying Value		Fair Value
Long-term debt, excluding finance lease obligations
2032 Senior Notes	Level 2	$	600,000	$	614,250	$	600,000	$	615,000
Term Loan B	Level 2		296,000		295,260		394,000		393,508
Total long-term debt		$	896,000	$	909,510	$	994,000	$	1,008,508

The fair value of our senior notes was determined using unadjusted quoted market prices. The fair value of our Term Loan B agreement was determined using unadjusted quoted market prices for similar debt securities in active markets.

5. Stockholders’ Equity

Share Repurchases

In August 2017, our Board of Directors (the “Board”) approved a share repurchase program authorizing us to repurchase up to $1.0 billion of our common stock, subject to certain limitations governed by our debt agreements. In 2021, our Board approved a term extension of our share repurchase program through September 30, 2025. On May 6, 2025, the Board approved a term extension of the share repurchase program for an additional four-year period ending September 30, 2029. Under this extension the Company is authorized to purchase its common stock up to the amount remaining under the Board’s 2017 authorization. As of June 30, 2025, we had approximately $487.8 million of additional share repurchase authorizations remaining under our share repurchase program. For the three and nine months ended June 30, 2025, we repurchased 1.5 million shares and 3.3 million shares of our common stock at a total cost of $13.0 million and $33.0 million, respectively, excluding the impact of excise taxes. For the three and nine months ended June 30, 2024, we repurchased 0.9 million shares and 4.3 million shares of our common stock at a total cost of $10.0 million and $50.0 million, respectively, excluding the impact of excise taxes.

Accumulated Other Comprehensive Loss

The change in accumulated other comprehensive loss (“AOCL”) was as follows (in thousands):


	Foreign Currency Translation Adjustments			Interest Rate Swap			Foreign Exchange Contracts			Total
Balance at September 30, 2024	$	(112,409	)	$	(431	)	$	(329	)	$	(113,169	)
Other comprehensive income (loss) before reclassification, net of tax		11,350			1,545			322			13,217
Reclassification to net earnings, net of tax		—			(842	)		(542	)		(1,384	)
Balance at June 30, 2025	$	(101,059	)	$	272		$	(549	)	$	(101,336	)

The tax impacts for the changes in other comprehensive income (loss) and the reclassifications to net earnings were not material.

6. Weighted-Average Shares

The following table presents a reconciliation of basic and diluted weighted-average shares (in thousands):


	Three Months Ended June 30,				Nine Months Ended June 30,
	2025		2024		2025		2024
Weighted-average basic shares		100,463		103,190		101,367		104,477
Dilutive securities:
Stock option and stock award programs		2,776		2,707		2,820		2,709
Weighted-average diluted shares		103,239		105,897		104,187		107,186

Anti-dilutive options excluded from our computation of diluted shares		1,840		1,678		1,499		1,678

7. Property and Equipment, Net and Divesture of Subsidiary

During the nine months ended June 30, 2025, we sold our corporate headquarters located in Denton, Texas, to Denton County, Texas, for $45.5 million, excluding $1.5 million in closing costs. As of September 30, 2024, the assets included in the sale were classified as held for sale within other current assets on our condensed consolidated balance sheet. As a result of the sale, we recognized a gain of approximately $26.6 million within selling, general and administrative expenses in our condensed consolidated statements of earnings. Concurrent with the sale, we entered into a lease agreement with Denton County to lease back the property at a monthly rent of $35,000 for a term of twelve months, with the option to extend the term for an additional three months.

On April 1, 2025, we sold 100% of the outstanding shares of our wholly owned subsidiary, Pro-Duo Spain SL, to an unaffiliated third party for $3.2 million. As part of the transaction, we divested operations of 19 stores in Spain and recognized a gain of $0.8 million, recorded within selling, general, and administrative expenses in our condensed consolidated results of operations. We do not expect the sale to have a material impact on our consolidated financial position or results of operations.

8. Goodwill and Intangible Assets

During the three months ended March 31, 2025, we completed our annual impairment assessments for goodwill and indefinite-lived intangible assets. For our goodwill testing, we performed a qualitative analysis and determined that there was no indication of impairment requiring further quantitative testing. For our indefinite-lived intangible asset assessment, we performed a quantitative analysis and determined a trade name within the SBS reporting segment, as defined below, was fully impaired. As a result, we recognized an impairment loss of $1.8 million within selling, general, and administrative expenses. No material impairment losses were recognized in the prior periods presented in connection with our goodwill and intangible assets.

Goodwill allocated to our Sally Beauty Supply ("SBS") and Beauty Systems Group ("BSG") reporting units, which are also defined as our SBS and BSG segments, was $91.1 million and $449.8 million, respectively, as of June 30, 2025.


	Three Months Ended June 30,				Nine Months Ended June 30,
(in thousands)	2025		2024		2025		2024
Intangible assets amortization expense	$	851	$	764	$	2,550	$	2,415

For the nine months ended June 30, 2025, changes in goodwill reflect the effects of foreign currency translation adjustments of $2.5 million and purchase accounting adjustments of $0.4 million related to the finalization of the fair value assessment for our acquisition of Exclusive Beauty Supply, Inc, partially offset by a reduction of $0.2 million in conjunction with the sale of Pro-Duo Spain SL. Additionally, changes to other intangibles include the effects of foreign currency translation adjustments of $0.5 million.

9. Accrued Liabilities

Accrued liabilities consist of the following (in thousands):


	June 30, 2025		September 30, 2024
Compensation and benefits	$	61,481	$	76,649
Deferred revenue		15,829		16,080
Interest payable		14,034		4,108
Accrued freight		11,064		8,240
Rental obligations		10,676		11,039
Insurance reserves		8,084		7,526
Operating accruals and other		44,123		39,308
Total accrued liabilities	$	165,291	$	162,950

10. Short-term and Long-term Debt

In December 2024, the Company and other parties to the ABL Facility entered into a fifth amendment, which, among other things, extended the maturity date to December 11, 2029, modified certain covenant provisions, and increased the commitment fee to 0.25% from 0.20%. At June 30, 2025, there were no outstanding borrowings under our ABL Facility, and we had $482.5 million available for borrowing, including under our Canadian sub-facility, subject to a borrowing base limitation, as reduced by outstanding letters of credit. In connection with the amendment, we incurred approximately $1.5 million in debt issuance costs that are being amortized over the remaining life of the ABL Facility.

Additionally, during the three months ended December 31, 2024, March 31, 2025, and June 30, 2025, we voluntarily repaid $40.0 million, $35.0 million, and $20.0 million, respectively, of outstanding Term Loan B principle in addition to our mandatory quarterly payments. In connection with the repayments, we recognized a $0.9 million loss on debt extinguishment within interest expense related to unamortized debt issuance costs for the nine months ended June 30, 2025.

11. Derivative Instruments and Hedging Activities

During the nine months ended June 30, 2025, we did not purchase or hold any derivative instruments for trading or speculative purposes. See Note 4, Fair Value Measurements, for the classification and fair value of our derivative instruments.

Designated Cash Flow Hedges

Foreign Currency Forwards

We regularly enter into foreign currency forwards to mitigate our exposure to exchange rate changes on forecasted inventory purchases in U.S. dollars by our foreign subsidiaries. At June 30, 2025, we held forwards, which expire ratably through September 30, 2025, with a notional amount, based upon exchange rates at June 30, 2025, as follows (in thousands):


Notional Currency	Notional Amount
Mexican Peso	$	6,113
Canadian Dollar		3,300
Euro		1,738
Total	$	11,151

The changes in fair value related to these foreign currency forwards are recorded quarterly into AOCL. As the forwards are exercised, the realized gains or losses are recognized into cost of goods sold (“COGS”), based on inventory turns, in our condensed consolidated statements of earnings. For the three months ended June 30, 2025 and 2024, we recognized net gains of $0.6 million and net losses of $0.4 million, respectively. For the nine months ended June 30, 2025 and 2024, we recognized net gains of $0.7 million and net losses of $2.5 million, respectively. Based on June 30, 2025, valuations and exchange rates, we expect to reclassify approximately $0.4 million of net losses from AOCL into COGS over the next 12 months.

Interest Rate Swap

In April 2023, we entered into a three-year interest rate swap agreement with an initial notional amount of $200 million (the “Interest Rate Swap”) to mitigate the exposure to higher interest rates in connection with our Term Loan B due in 2030. The Interest Rate Swap involves fixed monthly payments at the contract rate of 3.705%, and in return, we will receive a floating interest payment based on the 1-month Adjusted Term SOFR Rate. The Interest Rate Swap will mature in April 2026 and is designated as a cash flow hedge. Changes in the fair value of the Interest Rate Swap are recorded quarterly, net of income tax, and included in AOCL.

Each month, we recognize either income or expense, based on the position of the interest rates, into interest expense on our condensed consolidated statements of earnings related to the Interest Rate Swap. For the three months ended June 30, 2025 and 2024, we recognized income of $0.2 million and $0.8 million, respectively. For the nine months ended June 30, 2025 and 2024, we recognized income of $1.1 million and $2.5 million, respectively. At June 30, 2025, based on current at interest rates and the fair value of the Interest Rate Swap, we expect to reclassify approximately $0.3 million of net gains from AOCL into interest expense over the next 12 months.

Non-Designated Derivative Instruments

We also enter into foreign exchange forward contracts to mitigate our exposure to exchange rate fluctuations related to certain intercompany balances that are not considered permanently invested. At June 30, 2025, we held forward contracts, which mature at various dates during the first month of each of the next two fiscal quarters, with a notional amount, based upon exchange rates at June 30, 2025, as follows (in thousands):


Notional Currency	Notional Amount
British Pound	$	37,860
Euro		14,229
Canadian Dollar		11,656
Mexican Peso		7,032
Total	$	70,777

Changes in the fair value of the forward contracts, as well as realized gains or losses upon settlement, are recorded in selling, general and administrative expenses. For the three months ended June 30, 2025 and 2024, we recognized net losses of $1.3 million and net gains of $0.8 million, respectively, related to the foreign exchange forward contracts. For the nine months ended June 30, 2025 and 2024, we recognized net losses of $0.3 million and $0.8 million, respectively, related to the foreign exchange forward contracts.

12. Segment Reporting

Segment data for the three and nine months ended June 30, 2025 and 2024, is as follows (in thousands):


	Three Months Ended June 30,				Nine Months Ended June 30,
	2025		2024		2025		2024
Net sales:
SBS	$	526,782	$	536,536	$	1,552,803	$	1,573,015
BSG		406,525		405,804		1,201,545		1,208,988
Total	$	933,307	$	942,340	$	2,754,348	$	2,782,003
Earnings before provision for income taxes:
Segment operating earnings:
SBS	$	83,305	$	86,938	$	240,484	$	241,387
BSG		50,672		46,753		145,075		134,395
Segment operating earnings		133,977		133,691		385,559		375,782
Unallocated expenses (a)		55,804		61,538		137,693		174,954
Restructuring		—		383		—		361
Consolidated operating earnings		78,173		71,770		247,866		200,467
Interest expense		15,709		20,707		49,440		58,544
Earnings before provision for income taxes	$	62,464	$	51,063	$	198,426	$	141,923

(a)

Unallocated expenses consist of corporate and shared costs and are included in selling, general and administrative expenses in our condensed consolidated statements of earnings. For the nine months ended June 30, 2025, unallocated expenses include a $26.6 million gain from the sale of our corporate headquarters. See Note 7, Property and Equipment, Net, for more information.

Sales between segments, which are eliminated in consolidation, were not material during the three and nine months ended June 30, 2025 and 2024.

Disaggregation of net sales by segment

Periodically, we make minor adjustments to our product hierarchy, which impacts the roll-up of our merchandise categories. As a result, certain prior year amounts have been reclassified to conform to current year presentation. The following tables disaggregate our segment revenues by merchandise category.


	Three Months Ended June 30,						Nine Months Ended June 30,
SBS	2025			2024			2025			2024
Hair color		42.9	%		40.6	%		41.9	%		39.7	%
Hair care		23.0	%		24.2	%		23.5	%		24.5	%
Styling tools and supplies		16.2	%		16.2	%		16.9	%		17.1	%
Nail		10.2	%		10.5	%		10.0	%		10.2	%
Skin and cosmetics		7.5	%		8.1	%		7.5	%		8.0	%
Other beauty items		0.2	%		0.4	%		0.2	%		0.5	%
Total		100.0	%		100.0	%		100.0	%		100.0	%


	Three Months Ended June 30,						Nine Months Ended June 30,
BSG	2025			2024			2025			2024
Hair color		43.0	%		41.8	%		41.9	%		40.9	%
Hair care		41.6	%		41.7	%		41.8	%		42.1	%
Styling tools and supplies		9.9	%		10.3	%		10.4	%		10.5	%
Skin and cosmetics		3.2	%		3.4	%		3.5	%		3.7	%
Nail		2.2	%		2.5	%		2.3	%		2.4	%
Other beauty items		0.1	%		0.3	%		0.1	%		0.4	%
Total		100.0	%		100.0	%		100.0	%		100.0	%

The following tables disaggregate our segment revenue by sales channels:


	Three Months Ended June 30,						Nine Months Ended June 30,
SBS	2025			2024			2025			2024
Company-operated stores		91.8	%		93.0	%		91.9	%		93.2	%
E-commerce		8.2	%		7.0	%		8.1	%		6.8	%
Total		100.0	%		100.0	%		100.0	%		100.0	%


	Three Months Ended June 30,						Nine Months Ended June 30,
BSG	2025			2024			2025			2024
Company-operated stores		69.5	%		68.5	%		69.4	%		68.3	%
E-commerce		13.7	%		13.4	%		13.9	%		13.7	%
Distributor sales consultants		9.2	%		10.7	%		9.4	%		10.6	%
Franchise stores		7.6	%		7.4	%		7.3	%		7.4	%
Total		100.0	%		100.0	%		100.0	%		100.0	%

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

This section discusses management’s view of the financial condition, results of operations and cash flows of Sally Beauty for the periods covered by this Quarterly Report. This section should be read in conjunction with the information contained in our Annual Report on Form 10-K for the fiscal year ended September 30, 2024, including the Risk Factors sections therein, as well as the condensed consolidated interim financial statements and accompanying notes included elsewhere in this Quarterly Report.

Financial Summary for the Three Months Ended June 30, 2025

•

Consolidated net sales for the three months ended June 30, 2025, decreased $9.0 million, or 1.0%, to $933.3 million, compared to the three months ended June 30, 2024;

•

Consolidated comparable sales decreased 0.4% for the three months ended June 30, 2025;

•

Consolidated gross profit for the three months ended June 30, 2025, was relatively flat at $481.0 million, compared to the three months ended June 30, 2024. Consolidated gross margin increased 50 bps to 51.5% for the three months ended June 30, 2025, compared to the three months ended June 30, 2024;

•

Consolidated operating earnings for the three months ended June 30, 2025, increased $6.4 million, or 8.9%, to $78.2 million, compared to the three months ended June 30, 2024. Operating margin increased 80 bps to 8.4% for the three months ended June 30, 2025, compared to the three months ended June 30, 2024;

•

For the three months ended June 30, 2025, our consolidated net earnings increased $8.0 million, or 21.2%, to $45.7 million, compared to the three months ended June 30, 2024;

•

For the three months ended June 30, 2025, our diluted earnings per share was $0.44 compared to $0.36 for the three months ended June 30, 2024; and

•

Cash provided by operations was $69.4 million for the three months ended June 30, 2025, compared to $47.9 million for the three months ended June 30, 2024.

Comparable Sales

We consider comparable sales to be an appropriate performance indicator to measure our sales growth compared to the prior period. Our comparable sales metric includes sales from stores that have been operating for 14 months or longer as of the end of the reporting period, as well as sales from e-commerce revenue, sales to franchisees, and full service sales. Our comparable sales metric excludes the impact of foreign exchange rate fluctuations and sales from stores relocated until 14 months after the relocation. Similarly, revenue from acquired stores is excluded from our comparable sales metric until 14 months after the acquisition. Our calculation of comparable sales might not be the same as other retailers as the calculation varies across the retail industry.

Overview

Key Operating Metrics

The following table sets forth, for the periods indicated, information concerning key measures on which we rely to evaluate our operating performance (dollars in thousands):


	Three Months Ended June 30,			Nine Months Ended June 30,
	2025	2024	Increase (Decrease)	2025	2024	Increase (Decrease)
Net sales:

Sally Beauty Holdings, Inc. 10-Q