Sally Beauty Holdings said second-quarter fiscal 2026 consolidated net sales rose 2.3% to $903 million from a year earlier, while consolidated comparable sales increased 1.3%.
Gross margin widened to 52.7% from 52.0% a year ago, a 70-basis-point increase. Adjusted gross margin was 52.8%, up 80 basis points.
Selling, general and administrative expenses came in at $404 million, up $14 million from the prior-year quarter on a GAAP basis and up $20 million on an adjusted basis.
Operating earnings were $72 million, with operating margin at 8.0%. Adjusted operating earnings were $73 million, with adjusted operating margin at 8.1%.
Diluted earnings per share increased 13% to $0.43 from the prior-year quarter. Adjusted diluted EPS rose 5% to $0.44.
Global e-commerce sales climbed 13% to $108 million, accounting for 12% of net sales.
Cash flow from operations totaled $73 million and free cash flow was $44 million. During the quarter, the company repaid $20 million of term loan debt and repurchased 1.7 million shares for $25 million.
At March 31, 2026, Sally Beauty held $157 million in cash and cash equivalents and had no outstanding borrowings under its asset-based revolving credit line. Inventory was $987 million, down 2% from a year earlier. Net debt leverage stood at 1.5x.
By segment, Sally Beauty net sales increased 4.1% to $521.2 million, while comparable sales rose 2.5% after a 0.3% decline in the prior-year quarter. Segment operating earnings edged up 1.1% to $78.1 million, while operating margin slipped to 15.0% from 15.4%.
Beauty Systems Group net sales were $382.1 million, down 0.1% from $382.6 million a year earlier. Comparable sales improved to a 0.3% decline from a 2.7% decline. Segment operating earnings rose 7.8% to $47.4 million, and operating margin increased to 12.4% from 11.5%.
For the third quarter, the company guided to consolidated net sales of $932 million to $942 million, comparable sales approximately flat, adjusted operating earnings of $83 million to $89 million, and adjusted diluted EPS of $0.52 to $0.56.
For full-year fiscal 2026, Sally Beauty narrowed its net sales outlook to $3.725 billion to $3.750 billion from $3.71 billion to $3.77 billion, while leaving comparable sales, adjusted operating earnings, adjusted diluted EPS, capital expenditures, and free cash flow unchanged. Following these announcements, the company's shares moved -8.48%, and are now trading at a price of $12.84. Check out the company's full 8-K submission here.
