DENTON, Texas - Sally Beauty (NYSE:SBH) Holdings, Inc. (NYSE:SBH), a leading distributor of professional beauty supplies, announced its second quarter results with earnings falling short of Wall Street expectations.
Despite the earnings miss, the company's stock experienced a modest uptick of +1.6% following the earnings release.
The company reported adjusted earnings per share (EPS) of $0.35, which was $0.05 below the analyst estimate of $0.40. Revenue for the quarter was $908 million, also slightly missing the consensus estimate of $910.76 million.
The company's performance this quarter was influenced by a mix of strategic gains and market challenges. According to Denise Paulonis, president and chief executive officer, the quarter reflected benefits from expanded distribution and product innovation, particularly in the Beauty Systems Group segment. However, these were offset by moderating traffic and customer purchasing patterns in the Sally Beauty segment, which were impacted by the inflationary environment.
Year-over-year, the company saw a slight decline in net sales of 1.1%, with consolidated comparable sales decreasing by 1.5%. This was partially balanced by a favorable impact from foreign currency translation and a 9.9% contribution from global e-commerce sales to net sales.
Despite these challenges, the company executed $20 million in share repurchases and completed the refinancing of a $680 million senior unsecured note due 2025, which has been extended to 2032. The refinancing and solid cash flow from operations, which totaled $37 million for the quarter, allowed the company to continue returning value to shareholders.
Looking ahead, Sally Beauty updated its fiscal year 2024 guidance, with net sales and comparable sales expected to be approximately flat compared to the prior year. The gross margin is projected to be between 50.5% and 51.0%, with an adjusted operating margin of about 8.5%. Operating cash flow is anticipated to be around $240 million, and capital expenditures are expected to be approximately $100 million.
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