Beauty supply retailer Sally Beauty (NYSE: SBH) met Wall Street’s revenue expectations in Q2 CY2026, but sales were flat year on year at $935.5 million. The company’s outlook for the full year was close to analysts’ estimates with revenue guided to $3.73 billion at the midpoint. Its non-GAAP profit of $0.55 per share was 3% above analysts’ consensus estimates.
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Sally Beauty (SBH) Q2 CY2026 Highlights:
- Revenue: $935.5 million vs analyst estimates of $938.3 million (flat year on year, in line)
- Adjusted EPS: $0.55 vs analyst estimates of $0.53 (3% beat)
- Adjusted EBITDA: $117.4 million vs analyst estimates of $115.3 million (12.5% margin, 1.8% beat)
- The company reconfirmed its revenue guidance for the full year of $3.73 billion at the midpoint
- Management reiterated its full-year Adjusted EPS guidance of $2.06 at the midpoint
- Operating Margin: 9.2%, in line with the same quarter last year
- Free Cash Flow Margin: 6.6%, up from 5.3% in the same quarter last year
- Locations: 4,386 at quarter end, down from 4,425 in the same quarter last year
- Same-Store Sales were flat year on year, in line with the same quarter last year
- Market Capitalization: $1.43 billion
Company Overview
Catering to both everyday consumers as well as salon professionals, Sally Beauty (NYSE: SBH) is a retailer that sells salon-quality beauty products such as makeup and haircare products.
Revenue Growth
A company’s long-term sales performance can indicate its overall quality. Even a bad business can shine for one or two quarters, but a top-tier one grows for years.
With $3.73 billion in revenue over the past 12 months, Sally Beauty is a small retailer, which sometimes brings disadvantages compared to larger competitors benefiting from economies of scale and negotiating leverage with suppliers.
As you can see below, Sally Beauty struggled to increase demand as its $3.73 billion of sales for the trailing 12 months was close to its revenue three years ago. This was mainly because it didn’t open many new stores.
This quarter, Sally Beauty’s $935.5 million of revenue was flat year on year and in line with Wall Street’s estimates.
Looking ahead, sell-side analysts expect revenue to grow 1.1% over the next 12 months, similar to its three-year rate. Although this projection indicates its newer products will catalyze better top-line performance, it is still below the sector average.
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Store Performance
Number of Stores
The number of stores a retailer operates is a critical driver of how quickly company-level sales can grow.
Sally Beauty listed 4,386 locations in the latest quarter and has kept its store count flat over the last two years while other consumer retail businesses have opted for growth.
When a retailer keeps its store footprint steady, it usually means demand is stable and it’s focusing on operational efficiency to increase profitability.
Same-Store Sales
The change in a company’s store base only tells one side of the story. The other is the performance of its existing locations and e-commerce sales, which informs management teams whether they should expand or downsize their physical footprints. Same-store sales provides a deeper understanding of this issue because it measures organic growth at brick-and-mortar shops for at least a year.
Sally Beauty’s demand within its existing locations has barely increased over the last two years as its same-store sales were flat. This performance isn’t ideal, and we’d be skeptical if Sally Beauty starts opening new stores to artificially boost revenue growth.
In the latest quarter, Sally Beauty’s year on year same-store sales were flat. This performance was more or less in line with its historical levels.
Key Takeaways from Sally Beauty’s Q2 Results
It was encouraging to see Sally Beauty beat analysts’ EBITDA expectations this quarter. We were also happy its gross margin narrowly outperformed Wall Street’s estimates. Zooming out, we think this was a decent quarter. Investors were likely hoping for more, and shares traded down 3.2% to $14.50 immediately following the results.
So do we think Sally Beauty is an attractive buy at the current price? If you’re making that decision, you should consider the bigger picture of valuation, business qualities, as well as the latest earnings. We cover that in our actionable full research report which you can read here (it’s free).
