10-Q

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: MARCH 31, 2026


☐	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.)

7900 Windrose Ave
Plano, Texas		75024
(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 May 6, 2026: 95,408,486

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,” “our company,” “Sally Beauty,” “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 which are not purely historical facts or which 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,” "might" 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 which 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, 2025, and other filings with the U.S. Securities and Exchange Commission ("SEC") 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)


	March 31, 2026			September 30, 2025
	(Unaudited)
Assets
Current assets:
Cash and cash equivalents	$	157,401		$	149,162
Trade accounts receivable, net		26,231			31,828
Accounts receivable, other		75,401			84,734
Inventory		986,787			987,575
Other current assets		46,940			48,154
Total current assets		1,292,760			1,301,453
Property and equipment, net of accumulated depreciation of $963,117 at March 31, 2026, and $937,596 at September 30, 2025		285,335			284,284
Operating lease assets		635,406			646,698
Goodwill		539,061			540,674
Intangible assets, excluding goodwill, net of accumulated amortization of $9,052 at March 31, 2026, and $14,686 at September 30, 2025		51,375			53,018
Other assets		49,353			44,969
Total assets	$	2,853,290		$	2,871,096
Liabilities and Stockholders’ Equity
Current liabilities:
Current maturities of long-term debt	$	4,000		$	4,000
Accounts payable		222,635			224,507
Accrued liabilities		169,800			184,641
Current operating lease liabilities		157,050			158,566
Income taxes payable		—			4,260
Total current liabilities		553,485			575,974
Long-term debt		823,051			861,974
Long-term operating lease liabilities		531,987			538,426
Other liabilities		21,080			21,026
Deferred income tax liabilities, net		85,815			79,489
Total liabilities		2,015,418			2,076,889
Stockholders’ equity:
Common stock, $0.01 par value. Authorized 500,000 shares; 95,898 and 97,875 shares issued and shares outstanding at March 31, 2026, and September 30, 2025, respectively		959			979
Preferred stock, $0.01 par value. Authorized 50,000 shares; none issued		—			—
Accumulated earnings		946,455			898,076
Accumulated other comprehensive loss, net of tax		(109,542	)		(104,848	)
Total stockholders’ equity		837,872			794,207
Total liabilities and stockholders’ equity	$	2,853,290		$	2,871,096

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				Six Months Ended
	March 31,				March 31,
	2026		2025		2026		2025
Net sales	$	903,382	$	883,146	$	1,846,550	$	1,821,041
Cost of goods sold		427,610		424,329		887,519		885,384
Gross profit		475,772		458,817		959,031		935,657
Selling, general and administrative expenses		403,841		389,444		811,165		765,964
Operating earnings		71,931		69,373		147,866		169,693
Interest expense		14,165		16,289		28,785		33,731
Earnings before provision for income taxes		57,766		53,084		119,081		135,962
Provision for income taxes		15,071		13,874		30,829		35,739
Net earnings	$	42,695	$	39,210	$	88,252	$	100,223
Earnings per share:
Basic	$	0.44	$	0.39	$	0.91	$	0.98
Diluted	$	0.43	$	0.38	$	0.88	$	0.96
Weighted-average shares:
Basic		96,727		101,614		97,271		101,820
Diluted		99,721		104,435		100,265		104,682

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						Six Months Ended
	March 31,						March 31,
	2026			2025			2026			2025
Net earnings	$	42,695		$	39,210		$	88,252		$	100,223
Other comprehensive income (loss):
Foreign currency translation adjustments		(9,079	)		10,791			(4,692	)		(15,824	)
Interest rate swap, net of tax		90			(407	)		(49	)		744
Foreign exchange contracts, net of tax		163			(581	)		47			902
Other comprehensive income (loss), net of tax		(8,826	)		9,803			(4,694	)		(14,178	)
Total comprehensive income	$	33,869		$	49,013		$	83,558		$	86,045

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, 2025		97,875		$	979		$	—		$	898,076		$	(104,848	)	$	794,207
Net earnings		—			—			—			45,557			—			45,557
Other comprehensive income		—			—			—			—			4,132			4,132
Share-based compensation		—			—			7,555			—			—			7,555
Stock issued for equity awards		1,493			15			192			—			—			207
Employee withholding taxes paid related to net share settlement		(517	)		(5	)		(7,331	)		—			—			(7,336	)
Repurchases and cancellations of common stock		(1,359	)		(14	)		(416	)		(20,327	)		—			(20,757	)
Balance at December 31, 2025		97,492		$	975		$	—		$	923,306		$	(100,716	)	$	823,565
Net earnings		—			—			—			42,695			—			42,695
Other comprehensive loss		—			—			—			—			(8,826	)		(8,826	)
Share-based compensation		—			—			5,969			—			—			5,969
Stock issued for equity awards		68			1			70			—			—			71
Employee withholding taxes paid related to net share settlement		(1	)		—			(9	)		—			—			(9	)
Repurchases and cancellations of common stock		(1,661	)		(17	)		(6,030	)		(19,546	)		—			(25,593	)
Balance at March 31, 2026		95,898		$	959		$	—		$	946,455		$	(109,542	)	$	837,872


													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

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)


	Six Months Ended March 31,
	2026			2025
Cash Flows from Operating Activities:
Net earnings	$	88,252		$	100,223
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization		48,912			50,924
Share-based compensation expense		13,524			10,291
Amortization of deferred financing costs		965			1,092
Loss on early extinguishment of debt		296			759
Impairment of long-lived assets		—			1,779
Loss (gain) on disposal of equipment and other property		11			(26,641	)
Deferred income taxes		6,208			(4,581	)
Changes in (exclusive of effects of acquisitions):
Trade accounts receivable		5,517			5,779
Accounts receivable, other		8,910			(9,751	)
Inventory		(1,750	)		20,759
Other current assets		1,148			6,138
Other assets		(4,548	)		666
Operating leases, net		3,411			(509	)
Accounts payable and accrued liabilities		7			(57,761	)
Income taxes payable		(4,400	)		(13,583	)
Other liabilities		56			(1,063	)
Net cash provided by operating activities		166,519			84,521
Cash Flows from Investing Activities:
Payments for property and equipment		(64,946	)		(38,971	)
Proceeds from sale of property and equipment, net		—			43,574
Acquisitions, net of cash acquired		—			(371	)
Net cash (used) provided by investing activities		(64,946	)		4,232
Cash Flows from Financing Activities:
Proceeds from issuance of long-term debt and ABL Facility		—			351,000
Repayments of long-term debt and ABL Facility		(40,000	)		(428,079	)
Debt issuance costs		—			(1,525	)
Proceeds from equity awards		278			403
Payments for common stock repurchased		(46,349	)		(20,187	)
Employee withholding taxes paid related to net share settlement of equity awards		(7,345	)		(5,271	)
Net cash used by financing activities		(93,416	)		(103,659	)
Effect of foreign exchange rate changes on cash and cash equivalents		82			(881	)
Net increase (decrease) in cash and cash equivalents		8,239			(15,787	)
Cash and cash equivalents, beginning of period		149,162			107,961
Cash and cash equivalents, end of period	$	157,401		$	92,174
Supplemental Cash Flow Information:
Interest paid	$	28,529		$	33,344
Income taxes paid	$	33,752		$	55,815
Capital expenditures incurred but not paid	$	8,129		$	6,999

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 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, 2025. 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 March 31, 2026, and September 30, 2025, our consolidated results of operations, consolidated comprehensive income, consolidated statements of stockholders’ equity for the three and six months ended March 31, 2026 and 2025, and consolidated cash flows for the six months ended March 31, 2026 and 2025.

Principles of Consolidation

The unaudited condensed consolidated interim financial statements include all accounts of Sally Beauty Holdings, Inc. and its 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 unaudited 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 further 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 December 2023, the FASB issued accounting standards update (“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. 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 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):


	Six Months Ended March 31,
	2026			2025
Beginning Balance	$	10,027		$	11,493
Loyalty points and gift cards issued but not redeemed, net of estimated breakage		5,071			4,545
Revenue recognized from beginning liability		(5,594	)		(4,618	)
Ending Balance	$	9,504		$	11,420

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	March 31, 2026		September 30, 2025
Financial Assets:
Foreign exchange contracts
Designated cash flow hedges	Other current assets	Level 2	$	64	$	87
Non-designated cash flow hedges	Other current assets	Level 2		735		570
Interest rate swap	Other assets	Level 2		—		59
Total assets			$	799	$	716
.
Financial Liabilities:
Foreign exchange contracts
Designated cash flow hedges	Accrued liabilities	Level 2	$	351	$	57
Non-designated cash flow hedges	Accrued liabilities	Level 2		379		225
Interest rate swap	Other Liabilities	Level 2		6		—
Total liabilities			$	736	$	282

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 debt issuance costs and original issue discounts, are as follows:


	Fair Value	March 31, 2026				September 30, 2025
(in thousands)	Hierarchy Level	Carrying Value		Fair Value		Carrying Value		Fair Value
Long-term debt
Senior notes due 2032	Level 2	$	600,000	$	612,000	$	600,000	$	622,500
Term loan B due 2030	Level 2		235,000		234,413		275,000		276,375
Total long-term debt		$	835,000	$	846,413	$	875,000	$	898,875

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 May 2025, our Board approved a term extension of our share repurchase program to 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 March 31, 2026, we had approximately $421.3 million of additional share repurchase authorizations remaining under our share repurchase program. For the three and six months ended March 31, 2026, we repurchased 1.7 million shares and 3.0 million shares of our common stock at a total cost of $25.4 million and $46.0 million, respectively, excluding the impact of excise taxes. For the three and six months ended March 31, 2025, we repurchased 1.1 million shares and 1.8 million shares of our common stock at a total cost of $10.0 million and $20.0 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, 2025	$	(104,329	)	$	84		$	(603	)	$	(104,848	)
Other comprehensive income (loss) before reclassification, net of tax		(4,692	)		55			(371	)		(5,008	)
Reclassification to net earnings, net of tax		—			(104	)		418			314
Balance at March 31, 2026	$	(109,021	)	$	35		$	(556	)	$	(109,542	)

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 March 31,				Six Months Ended March 31,
	2026		2025		2026		2025
Weighted-average basic shares		96,727		101,614		97,271		101,820
Dilutive securities:
Stock option and stock award programs		2,994		2,821		2,994		2,862
Weighted-average diluted shares		99,721		104,435		100,265		104,682

Anti-dilutive options excluded from our computation of diluted shares		1,251		1,528		1,251		1,528

7. Property and Equipment, Net

In October 2024, 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 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 for the six months ended March 31, 2025.

8. Goodwill and Intangible Assets

As of January 31, 2026, we completed our annual assessments for impairment of goodwill and indefinite-lived intangible assets. For our goodwill testing, we performed a qualitative analysis and determined that there was no indication of impairment. For our indefinite-lived intangible asset assessment, we performed a quantitative analysis and determined that there was no impairment. No impairment losses were recognized in the current or prior periods presented in connection with our goodwill. In the prior year, we recognized a $1.8 million impairment loss in selling, general, and administrative expenses related to a trade name within the Sally reporting segment.

Goodwill allocated to our Sally and BSG reporting units, which are also defined as our Sally and BSG segments, was $89.8 million and $449.2 million, respectively, as of March 31, 2026. For the six months ended March 31, 2026, changes in goodwill reflect the effects of foreign currency exchange rates of $1.6 million.

The following table presents our amortization expense for the period (in thousands):


	Three Months Ended March 31,				Six Months Ended March 31,
	2026		2025		2026		2025
Intangible assets amortization expense	$	653	$	841	$	1,305	$	1,699

9. Accrued Liabilities

Accrued liabilities consist of the following (in thousands):


	March 31, 2026		September 30, 2025
Compensation and benefits	$	73,927	$	85,058
Deferred revenue		14,443		14,195
Rental obligations		11,700		10,286
Accrued freight		7,733		8,761
Insurance reserves		7,153		7,331
Interest payable		3,780		3,819
Operating accruals and other		51,064		55,191
Total accrued liabilities	$	169,800	$	184,641

10. Short-term and Long-term Debt

At March 31, 2026, there were no outstanding borrowings under our ABL Facility, and we had $482.3 million available for borrowing, including under our Canadian sub-facility, subject to a borrowing base limitation, as reduced by outstanding letters of credit.

During the three and six months ended March 31, 2026, we voluntarily repaid $19.0 million and $38.0 million, respectively, of outstanding Term Loan B principal in addition to our mandatory quarterly payment. In connection with the voluntary repayments, we recognized a $0.1 million loss and a $0.3 million loss on debt extinguishment within interest expense related to unamortized debt issuance costs for the three and six months ended March 31, 2026, respectively.

11. Derivative Instruments and Hedging Activities

During the six months ended March 31, 2026, 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 March 31, 2026, we held forwards, which expire ratably through September 30, 2026, with a notional amount, based upon exchange rates at March 31, 2026, as follows (in thousands):


Notional Currency	Notional Amount
Mexican Peso	$	9,548
Canadian Dollar		4,469
Total	$	14,017

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 March 31, 2026 and 2025, we recognized a net loss of $0.2 million and a net gain of $0.3 million, respectively. For the six months ended March 31, 2026 and 2025, we recognized a net loss of $0.5 million and a net gain of $0.1 million, respectively. Based on March 31, 2026, valuations and exchange rates, we expect to reclassify a net gain of approximately $0.4 million out of AOCL and 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 March 31, 2026 and 2025, we recognized expense of $0.1 million and income of $0.4 million, respectively. For the six months ended March 31, 2026 and 2025, we recognized income of $0.1 million and $0.9 million, respectively. At March 31, 2026, we expect to reclassify a net loss of approximately $0.1 million out of AOCL and into interest expense over the next 12 months.

Non-Designated Derivative Instruments

We also use foreign exchange forward contracts to mitigate our exposure to exchange rate fluctuations related to certain intercompany balances that are not considered permanently invested. At March 31, 2026, 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 March 31, 2026, as follows (in thousands):


Notional Currency	Notional Amount
British Pound	$	48,308
Euro		18,024
Canadian Dollar		11,643
Mexican Peso		1,715
Total	$	79,690

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 March 31, 2026 and 2025, the effects of these foreign exchange contracts on our condensed consolidated financial statements were a net gain of $0.4 million and a loss of $0.7 million, respectively. For the six months ended March 31, 2026 and 2025, the effects of these foreign exchange contracts on our condensed consolidated financial statements were net gains of $0.1 million and $1.0 million, respectively.

12. Segment Reporting

Our business is organized into two reportable segments: (i) Sally, a domestic and international chain of retail stores and digital platforms that offers professional beauty supplies to both salon professionals and retail customers primarily in North America, including Puerto Rico, and parts of Europe and South America and, (ii) BSG, including its franchise-based business Armstrong McCall, a full service distributor of beauty products and supplies that offers professional beauty products directly to salons and salon professionals through its professional-only stores, its own sales force, and digital platforms in partially exclusive geographical territories in the U.S., including Puerto Rico, and Canada.

Our Chief Operating Decision Maker ("CODM"), whom we have determined to be our Chief Executive Officer, regularly evaluates

the performance of our reportable segments by comparing current segment operating earnings to comparable prior periods and forecasted amounts. Included within segment operating earnings, the significant expense categories below are regularly provided to the CODM.

Segment Operating Performance

The following tables summarize our results for the three and six months ended March 31, 2026 and 2025 (in thousands):


`	Three Months Ended March 31, 2026						Three Months Ended March 31, 2025
	Sally		BSG		Total		Sally		BSG		Total
Net sales (a)	$	521,236	$	382,146	$	903,382	$	500,575	$	382,571	$	883,146
Less: (b)
Cost of goods sold		201,904		225,706		427,610		194,178		230,151		424,329
Selling, general, and administrative expenses		241,183		109,072		350,255		229,092		108,486		337,578
Segment operating earnings		78,149		47,368		125,517		77,305		43,934		121,239

Unallocated expenses (c)						53,586						51,866
Interest expense						14,165						16,289
Earnings before provision for income taxes					$	57,766					$	53,084


`	Six Months Ended March 31, 2026						Six Months Ended March 31, 2025
	Sally		BSG		Total		Sally		BSG		Total
Net sales (a)	$	1,052,837	$	793,713	$	1,846,550	$	1,026,021	$	795,020	$	1,821,041
Less: (b)
Cost of goods sold		415,563		471,956		887,519		406,368		479,016		885,384
Selling, general, and administrative expenses		481,228		220,482		701,710		462,474		221,601		684,075
Segment operating earnings		156,046		101,275		257,321		157,179		94,403		251,582

Unallocated expenses (c)						109,455						81,889
Interest expense						28,785						33,731
Earnings before provision for income taxes					$	119,081					$	135,962

(a)

There were no intersegment sales between our segments, nor did any single customer account for 10% or more of revenue.

(b)

The significant expense categories and amounts align with the segment-level information that is regularly provided to the CODM.

(c)

Unallocated expenses consist of corporate and shared costs, including certain costs associated with our Fuel for Growth initiative, and are included in selling, general and administrative expenses in our condensed consolidated statements of earnings. For the six months ended March 31, 2025, unallocated expenses included a $26.6 million gain related to the sale of our corporate headquarters. See Note 7, Property and Equipment, Net, for more information.

Other Segment Disclosures


	Three Months Ended March 31,				Six Months Ended March 31,
(in thousands)	2026		2025		2026		2025
Depreciation and amortization:
Sally	$	14,306	$	14,074	$	27,738	$	28,732
BSG		9,006		9,765		17,680		18,252
Unallocated		1,968		1,520		3,494		3,940
Total	$	25,280	$	25,359	$	48,912	$	50,924

Disaggregation of net sales by segment

The following tables disaggregate our segment revenues by merchandise category.


	Three Months Ended March 31,						Six Months Ended March 31,
Sally	2026			2025			2026			2025
Hair color		45.1	%		42.3	%		44.0	%		41.3	%
Hair care		21.5	%		23.6	%		21.8	%		23.7	%
Styling tools and supplies		16.1	%		16.2	%		16.7	%		16.8	%
Nail		9.9	%		10.0	%		9.9	%		10.0	%
Skin and cosmetics		7.1	%		7.4	%		7.3	%		7.6	%
Other beauty items		0.3	%		0.5	%		0.3	%		0.6	%
Total		100.0	%		100.0	%		100.0	%		100.0	%


	Three Months Ended March 31,						Six Months Ended March 31,
BSG	2026			2025			2026			2025
Hair color		43.8	%		42.8	%		42.7	%		41.4	%
Hair care		40.8	%		40.9	%		41.8	%		41.9	%
Styling tools and supplies		10.1	%		10.5	%		10.1	%		10.6	%
Skin and cosmetics		2.9	%		3.4	%		3.2	%		3.6	%
Nail		2.1	%		2.2	%		2.0	%		2.3	%
Other beauty items		0.3	%		0.2	%		0.2	%		0.2	%
Total		100.0	%		100.0	%		100.0	%		100.0	%

The following tables disaggregate our segment revenue by sales channels:


	Three Months Ended March 31,						Six Months Ended March 31,
Sally	2026			2025			2026			2025
Company-operated stores		90.3	%		91.8	%		90.4	%		92.0	%
E-commerce		9.7	%		8.2	%		9.6	%		8.0	%
Total		100.0	%		100.0	%		100.0	%		100.0	%


	Three Months Ended March 31,						Six Months Ended March 31,
BSG	2026			2025			2026			2025
Company-operated stores		69.3	%		69.3	%		69.3	%		69.4	%
E-commerce		14.9	%		13.9	%		14.8	%		14.0	%
Salon business consultants		8.4	%		9.3	%		8.5	%		9.5	%
Franchise stores		7.4	%		7.5	%		7.4	%		7.1	%
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, 2025, including the Risk Factors sections therein, and information contained elsewhere in this Quarterly Report, including the condensed consolidated interim financial statements and notes to those financial statements.

Financial Summary for the Three Months Ended March 31, 2026

•

Consolidated net sales for the three months ended March 31, 2026, increased $20.2 million, or 2.3%, to $903.4 million, compared to the three months ended March 31, 2025. Consolidated net sales included a positive impact from changes in foreign currency exchange rates of $12.8 million;

•

Consolidated comparable sales were 1.3% for the three months ended March 31, 2026;

•

Consolidated gross profit for the three months ended March 31, 2026, increased $17.0 million, or 3.7%, to $475.8 million, compared to the three months ended March 31, 2025. Consolidated gross margin increased 70 bps to 52.7% for the three months ended March 31, 2026, compared to the three months ended March 31, 2025;

•

Consolidated operating earnings for the three months ended March 31, 2026, increased $2.6 million, or 3.7%, to $71.9 million, compared to the three months ended March 31, 2025. Operating margin increased 10 bps to 8.0% for the three months ended March 31, 2026, compared to the three months ended March 31, 2025;

•

For the three months ended March 31, 2026, our consolidated net earnings increased $3.5 million, or 8.9%, to $42.7 million, compared to the three months ended March 31, 2025;

•

For the three months ended March 31, 2026, our diluted earnings per share was $0.43 compared to $0.38 for the three months ended March 31, 2025; and

•

Cash provided by operations was $73.3 million for the three months ended March 31, 2026, compared to $51.1 million for the three months ended March 31, 2025.

Comparable Sales

We believe that comparable sales is an appropriate performance indicator to measure our sales growth compared to the prior period. Our comparable sales include sales from stores that have been operating for 14 months or longer as of the last day of a month and from e-commerce revenue. Additionally, comparable sales include sales to franchisees and full service sales. Our comparable sales excludes the effect of changes in foreign exchange rates and sales from stores relocated until 14 months after the relocation. Revenue from acquired stores is excluded from our comparable sales calculation 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 March 31,												Six Months Ended March 31,
	2026			2025			Increase (Decrease)						2026			2025			Increase (Decrease)
Net sales:
Sally	$	521,236		$	500,575		$	20,661			4.1	%	$	1,052,837		$	1,026,021		$	26,816			2.6	%
BSG		382,146			382,571			(425	)		(0.1	)%		793,713			795,020			(1,307	)		(0.2	)%
Consolidated	$	903,382		$	883,146		$	20,236			2.3	%	$	1,846,550		$	1,821,041		$	25,509			1.4	%

Gross profit:
Sally	$	319,332		$	306,397		$	12,935			4.2	%	$	637,274		$	619,653		$	17,621			2.8	%
BSG		156,440			152,420			4,020			2.6	%		321,757			316,004			5,753			1.8	%
Consolidated	$	475,772		$	458,817		$	16,955			3.7	%	$	959,031		$	935,657		$	23,374			2.5	%

Segment gross margin:
Sally		61.3	%		61.2	%	10			bps				60.5	%		60.4	%	10			bps
BSG		40.9	%		39.8	%	110			bps				40.5	%		39.7	%	80			bps
Consolidated		52.7	%		52.0	%	70			bps				51.9	%		51.4	%	50			bps

Net earnings:
Segment operating earnings:
Sally	$	78,149		$	77,305		$	844			1.1	%	$	156,046		$	157,179		$	(1,133	)		(0.7	)%
BSG		47,368			43,934			3,434			7.8	%		101,275			94,403			6,872			7.3	%
Segment operating earnings		125,517			121,239			4,278			3.5	%		257,321			251,582			5,739			2.3	%
Unallocated expenses (a)		53,586			51,866			1,720			3.3	%		109,455			81,889			27,566			33.7	%
Consolidated operating earnings		71,931			69,373			2,558			3.7	%		147,866			169,693			(21,827	)		(12.9	)%
Interest expense		14,165			16,289			(2,124	)		(13.0	)%		28,785			33,731			(4,946	)		(14.7	)%
Earnings before provision for income taxes		57,766			53,084			4,682			8.8	%		119,081			135,962			(16,881	)		(12.4	)%
Provision for income taxes		15,071			13,874			1,197			8.6	%		30,829			35,739			(4,910	)		(13.7	)%
Net earnings	$	42,695		$	39,210		$	3,485			8.9	%	$	88,252		$	100,223		$	(11,971	)		(11.9	)%
	.
Comparable sales growth (decline):
Sally		2.5	%		(0.3	)%	280			bps				1.3	%		0.8	%	50			bps
BSG		(0.3	)%		(2.7	)%	240			bps				(0.2	)%		(0.6	)%	40			bps
Consolidated		1.3	%		(1.3	)%	260			bps				0.6	%		0.2	%	40			bps

Number of stores at end-of-period (including franchises):
Sally		3,079			3,117			(38	)		(1.2	)%
BSG		1,320			1,329			(9	)		(0.7	)%
Consolidated		4,399			4,446			(47	)		(1.1	)%

(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. Additionally, unallocated expenses include certain costs associated with our Fuel for Growth initiative as well as the $26.6 million gain related to the sale of our corporate headquarters during the six months ended March 31, 2025. See Note 7, Property and Equipment, Net, for more information related to the sale of our corporate headquarters.

Results of Operations

The Three Months Ended March 31, 2026, compared to the Three Months Ended March 31, 2025

Net Sales

Sally. The increase in net sales for Sally was primarily driven by the following (in thousands):


Comparable sales	$	12,498
Sales outside comparable sales (a)		(3,323	)
Foreign currency exchange		11,486
Total	$	20,661

(a)

Includes closed stores, net of stores opened for less than 14 months.

Sally's net sales increase was primarily driven by an increase in comparable sales and positive impacts from foreign exchange rates, partially offset by net stores closed during the past twelve months. The increase in comparable sales was primarily driven by strong growth in hair color and digital marketplaces, partially offset by softness in our hair care category and the strategic exit of the majority of our full service operations across Europe. Sally’s comparable sales reflect increases in our number of transactions and average unit retail.

BSG. The decrease in net sales for BSG was primarily driven by the following (in thousands):


Comparable sales	$	(1,118	)
Sales outside comparable sales (a)		(660	)
Foreign currency exchange		1,353
Total	$	(425	)

(a)

Includes closed stores, net of stores opened for less than 14 months and sales from acquired stores.

BSG's net sales decrease was primarily from a decrease in comparable sales, partially offset by positive impacts from foreign exchange rates. The decrease in comparable sales was driven by external factors that impacted stylist purchasing behavior, partially offset by strong performance in our color category. BSG's comparable sales were slightly down with a decrease in the average number of units per transaction, offset by a higher average unit retail.

Gross Profit

Sally. Sally’s gross profit increased for the three months ended March 31, 2026, as a result of an increase in net sales and a higher gross margin on units sold. Sally’s gross margin improvement was driven primarily by higher product margins, resulting from benefits from our Fuel for Growth initiative, partially offset by impacts of the write-off of certain inventory related to the strategic exit of the majority of all our low-margin full service operations in Europe in connection with our Fuel for Growth initiative.

BSG. BSG’s gross profit increased for the three months ended March 31, 2026, as a result of a higher gross margin on units sold, partially offset by a decrease in net sales. BSG’s gross margin improvement was driven by higher product margins, resulting from benefits from our Fuel for Growth initiative.

Selling, General and Administrative Expenses

Sally. Sally’s selling, general and administrative expenses increased $12.1 million, or 5.3%, for the three months ended March 31, 2026, and included an unfavorable impact from foreign exchange rates of $5.5 million. As a percentage of Sally net sales, selling, general and administrative expenses for the three months ended March 31, 2026, were 46.3%, compared to 45.8% for the three months ended March 31, 2025. The increase as a percentage of sales was primarily due to increased labor and other compensation-related expenses, higher commission costs from digital marketplaces, and higher rent and advertising expenses, partially offset by leveraging as a result of higher net sales, impacts of an impairment charge related to a trade name (non-cash expense of $1.8 million) in the prior year, and Fuel for Growth benefits.

BSG. BSG’s selling, general and administrative expenses increased $0.6 million, or 0.5%, for the three months ended March 31, 2026. As a percentage of BSG net sales, selling, general and administrative expenses for the three months ended March 31, 2026, were 28.5% compared to 28.4% for the three months ended March 31, 2025. The increase as a percentage of sales was primarily due to higher labor and other compensation-related expenses and rent expense, partially offset by lower depreciation and amortization expenses.

Unallocated. Unallocated selling, general and administrative expenses, which represent certain corporate costs that have not been charged to our reporting segments, increased $1.7 million, or 3.3%, for the three months ended March 31, 2026, primarily due to an increased labor and other compensation-related expenses, higher information technology expense, and higher facility expenses related to our new corporate headquarters, partially offset by lower expenses related to our Fuel for Growth initiative.

Interest Expense

The decrease in interest expense was primarily a result of a lower average outstanding principal balance on our Term Loan B. See Note 10, Short-term and Long-term Debt, in Item 1 of this quarterly report for more information on our debt.

Provision for Income Taxes

The effective tax rate was 26.1% for the three months ended March 31, 2026 and 2025. The effective tax rate remained unchanged, primarily due to a decrease related to foreign operations in the current quarter, offset by the unfavorable tax impact of executive compensation.

The Six Months Ended March 31, 2026, compared to the Six Months Ended March 31, 2025

Net Sales

Sally. The increase in net sales for Sally was primarily driven by the following (in thousands):


Comparable sales	$	13,077
Sales outside comparable sales (a)		(6,118	)
Foreign currency exchange		19,857
Total	$	26,816

(a)

Includes closed stores, net of stores opened for less than 14 months.

Sally's net sales increase was primarily driven by positive impacts from foreign exchange rates and an increase in comparable sales, partially offset by net stores closed during the past twelve months. The increase in comparable sales was primarily driven by strong growth in hair color and digital marketplaces, partially offset by external factors that impacted consumer spending, including the U.S. government shutdown during the beginning of our fiscal year, softness in our hair care category, and the strategic exit of the majority of our full service operations across Europe. Sally’s comparable sales reflect increases in our average unit retail and number of transactions, partially offset by fewer average number of units per transaction.

BSG. The decrease in net sales for BSG was primarily driven by the following (in thousands):


Comparable sales	$	(1,870	)
Sales outside comparable sales (a)		(932	)
Foreign currency exchange		1,495
Total	$	(1,307	)

(a)

Includes closed stores, net of stores opened for less than 14 months and sales from acquired stores.

BSG's net sales decrease was primarily from a decrease in comparable sales. The decrease in comparable sales was driven by external factors that impacted stylist purchasing behavior, including the U.S. government shutdown during the beginning of our fiscal year, partially offset by strong performance in our color category. BSG's comparable sales decrease was primarily a result of a decrease in the number of transactions and average number of units per transaction, partially offset by an increase in average unit retail.

Gross Profit

Sally. Sally’s gross profit increased for the six months ended March 31, 2026, as a result of an increase in net sales and a higher gross margin on units sold. Sally’s gross margin improvement was driven primarily by higher product margins, resulting from benefits from our Fuel for Growth initiative, partially offset by impacts of the write-off of certain inventory related to the strategic exit of the majority of our low-margin full service operations in Europe in connection with our Fuel for Growth initiative.

BSG. BSG’s gross profit increased for the six months ended March 31, 2026, as a result of a higher gross margin on units sold, partially offset by a decrease in net sales. BSG’s gross margin improvement was driven by higher product margins, resulting from benefits from our Fuel for Growth initiative.

Selling, General and Administrative Expenses

Sally. Sally’s selling, general and administrative expenses increased $18.8 million, or 4.1%, for the six months ended March 31, 2026, and included an unfavorable impact from foreign exchange rates of $3.5 million. As a percentage of Sally net sales, selling, general and administrative expenses for the six months ended March 31, 2026, were 45.7%, compared to 45.1% for the six months ended March 31, 2025. The increase as a percentage of sales was primarily due to higher labor and other compensation-related expenses, higher commission costs from digital marketplaces, and higher rent and advertising expenses, partially offset by leveraging as a result of higher net sales, impacts of an impairment charge related to a trade name (non-cash expense of $1.8 million) in the prior year, and Fuel for Growth benefits.

BSG. BSG’s selling, general and administrative expenses decreased $1.1 million, or 0.5%, for the six months ended March 31, 2026. As a percentage of BSG net sales, selling, general and administrative expenses for the six months ended March 31, 2026, were 27.8% compared to 27.9% for the six months ended March 31, 2025. The decrease as a percentage of sales was primarily due to lower depreciation and amortization expenses, partially offset by higher labor and other compensation-related expenses and rent expense.

Unallocated. Unallocated selling, general and administrative expenses, which represent certain corporate costs that have not been charged to our reporting segments, increased $27.6 million or 33.7%, for the six months ended March 31, 2026, primarily due to a $26.6 million gain on the sale of our corporate headquarters in the prior year, higher facility expenses related to our new corporate headquarters, higher labor and other compensation-related expenses, and an increase in information technology expenses, partially offset by lower costs in connection with our Fuel for Growth initiative.

Interest Expense

Provision for Income Taxes

The effective tax rates were 25.9% and 26.3% for the six months ended March 31, 2026 and 2025, respectively. The decrease in the effective tax rate was primarily attributable to foreign operations and a more favorable tax impact of share‑based compensation in the current year, offset by higher federal tax credits in the prior year.

Liquidity and Capital Resources

Overview

Our principal sources of liquidity are cash from operations, cash and cash equivalents and borrowings under our ABL Facility. A substantial portion of our liquidity needs arise from funding the costs of our operations, working capital, capital expenditures, debt interest and principal payments. Additionally, under our share repurchase program (see below for more details) we will from time to time repurchase shares of our common stock on the open market to return value to our shareholders. At March 31, 2026, we had $639.7 million of available liquidity, which includes $482.3 million available for borrowing under our ABL Facility and cash and cash equivalents of $157.4 million.

Our working capital (current assets less current liabilities) increased $13.8 million, to $739.3 million at March 31, 2026, compared to $725.5 million at September 30, 2025. The increase was primarily driven by the timing of accrued compensation and benefit expenses within accrued expenses and an increase in cash and cash equivalents, partially offset by the timing of landlord receivables related to our new corporate headquarters within accounts receivable, other.

We anticipate that existing cash balances (excluding certain amounts permanently invested in connection with foreign operations), cash expected to be generated by operations, and funds available under our ABL Facility will be sufficient to fund our working capital and capital expenditure requirements over the next twelve months.

Cash Flows


	Six Months Ended March 31,
(in thousands)	2026			2025
Net cash provided by operating activities	$	166,519		$	84,521
Net cash (used) provided by investing activities		(64,946	)		4,232
Net cash used by financing activities		(93,416	)		(103,659	)

Net Cash Provided by Operating Activities

The increase in cash provided by operating activities was primarily driven by the timing of accounts payable, an increase in cash receipts from customers, lower income taxes paid, and the receipt of landlord receivables related to our new corporate headquarters, partially offset by strategic reduction in slower moving inventory in the prior year while maintaining consistent inventory levels this year.

Net Cash (Used) Provided by Investing Activities

The change in our investing activities was a result of lapping the cash received of $44 million from the sale of our corporate headquarters in the prior year and higher capital expenditures in the current year, which includes the build out of our new corporate headquarters.

Net Cash Used by Financing Activities

The decrease in cash used by financing activities was primarily driven by lower debt repayments in the current year, partially offset by higher share repurchases under our share repurchase program.

Debt and Guarantor Financial Information

At March 31, 2026, we had $835.0 million in outstanding debt principal, excluding unamortized debt issuance costs and debt discounts, in the aggregate, of $7.9 million. Our debt consists of $600.0 million in 2032 Senior Notes outstanding, and $235.0 million remaining on our Term Loan B.

We utilize our ABL Facility for the issuance of letters of credit, certain working capital and liquidity needs, and to manage normal fluctuations in our operational cash flow. In that regard, we may from time to time draw funds under the ABL Facility for general corporate purposes including funding of capital expenditures, acquisitions, paying down other debt and share repurchases. Amounts drawn on our ABL Facility are generally paid down with cash provided by our operating activities. During the six months ended March 31, 2026, there were no borrowings under the ABL Facility.

We are currently in compliance with the agreements and instruments governing our debt, including our financial covenants.

Guarantor Financial Information

Our 2032 Senior Notes were issued by our wholly owned subsidiaries, Sally Holdings LLC and Sally Capital Inc. (together, the “Issuers”). The notes are unsecured debt instruments guaranteed by us and certain of our wholly owned domestic subsidiaries (together, the “Guarantors”) and have certain restrictions on the ability of our subsidiaries to make certain restrictive payments to Sally Beauty. The guarantees are joint and several, and full and unconditional. Certain other subsidiaries, including our foreign subsidiaries, do not serve as guarantors.

The following summarized consolidating financial information represents financial information for the Issuers and the Guarantors on a combined basis. All transactions and intercompany balances between these combined entities have been eliminated.

The following table presents the summarized balance sheets information for the Issuers and the Guarantors as of March 31, 2026, and September 30, 2025:


(in thousands)	March 31, 2026		September 30, 2025
Cash and cash equivalents	$	94,276	$	85,360
Inventory	$	729,427	$	721,975
Current assets	$	927,458	$	927,667
Total assets	$	2,176,114	$	2,177,968
Intercompany payable	$	17,941	$	15,117
Current liabilities	$	467,406	$	474,079
Total liabilities	$	1,839,552	$	1,883,754

The following table presents the summarized statement of earnings information for the Issuers and the Guarantors for the six months ended March 31, 2026 (in thousands):


Net sales	$	1,492,172
Gross profit	$	789,221
Earnings before provision for income taxes	$	107,642
Net Earnings	$	80,021

Share Repurchase Programs

Under our current share repurchase program, we may from time to time repurchase our common stock on the open market. During the six months ended March 31, 2026 and 2025, we repurchased 3.0 million shares and 1.8 million shares of our common stock for $46.0 million and $20.0 million, respectively, under our share repurchase program, excluding the impact of excise taxes. See Note 5, Stockholders’ Equity, for more information about our share repurchase program.

Contractual Obligations

Other than our debt, as discussed above, there have been no material changes outside the ordinary course of our business to our contractual obligations since September 30, 2025.

Off-Balance Sheet Financing Arrangements

At March 31, 2026, and September 30, 2025, we had no off-balance sheet financing arrangements other than outstanding letters of credit related to inventory purchases and self-insurance programs.

Critical Accounting Estimates

There have been no material changes to our critical accounting estimates or assumptions since September 30, 2025.

Recent Accounting Pronouncements

See Note 2 of the Notes to Condensed Consolidated Financial Statements in Item 1 – “Financial Statements” in Part I – Financial Information.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

As a multinational corporation, we are subject to certain market risks including foreign currency fluctuations, interest rates and government actions. There have been no material changes to our market risks from September 30, 2025. See our disclosures about market risks contained in Item 7A. “Quantitative and Qualitative Disclosures about Market Risk” in Part II of our Annual Report on Form 10-K for the fiscal year ended September 30, 2025.

Item 4. Controls and Procedures

Controls Evaluation and Related CEO and CFO Certifications. Our management, with the participation of our principal executive officer (“CEO”) and principal financial officer (“CFO”), conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as of March 31, 2026. The controls evaluation was conducted by our Disclosure Committee, comprised of senior representatives from our finance, accounting, internal audit, and legal departments under the supervision of our CEO and CFO.

Certifications of our CEO and our CFO, which are required in accordance with Rule 13a-14 of the Exchange Act, are attached as exhibits to this Quarterly Report. This “Controls and Procedures” section includes the information concerning the controls evaluation referred to in the certifications, and it should be read in conjunction with the certifications for a more complete understanding of the topics presented.

Limitations on the Effectiveness of Controls. We do not expect that our disclosure controls and procedures will prevent all errors and all fraud. A system of controls and procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the system are met. Because of the limitations in all such systems, no evaluation can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. Furthermore, the design of any system of controls and procedures is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions, regardless of how unlikely. Because of these inherent limitations in a cost-effective system of controls and procedures, misstatements or omissions due to error or fraud may occur and not be detected.

Scope of the Controls Evaluation. The evaluation of our disclosure controls and procedures included a review of their objectives and design, our implementation of the controls and procedures and the effect of the controls and procedures on the information generated for use in this Quarterly Report. In the course of the evaluation, we sought to identify whether we had any data errors, control problems or acts of fraud and to confirm that appropriate corrective action, including process improvements, was being undertaken if needed. This type of evaluation is performed on a quarterly basis so that conclusions concerning the effectiveness of our disclosure controls and procedures can be reported in our Quarterly Reports on Form 10-Q and our Annual Reports on Form 10-K. Many of the components of our disclosure controls and procedures are also evaluated by our internal audit department, by our legal department and by personnel in our finance organization. The overall goals of these various evaluation activities are to monitor our disclosure controls and procedures on an ongoing basis and to maintain them as dynamic systems that change as conditions warrant.

Conclusions regarding Disclosure Controls. Based on the required evaluation of our disclosure controls and procedures, our CEO and CFO have concluded that, as of March 31, 2026, we maintain disclosure controls and procedures that are effective in providing reasonable assurance that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our CEO and CFO, as appropriate to allow timely decisions regarding required disclosure.

Changes in Internal Control over Financial Reporting. During our most recent fiscal quarter, there have been no changes in our internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II — OTHER INFORMATION

Item 1. Legal Proceedings

We are involved, from time to time, in various claims and lawsuits incidental to the conduct of our business in the ordinary course. We carry insurance coverage in such amounts in excess of our self-insured retention as we believe to be reasonable under the circumstances and that may or may not cover any or all of our liabilities in respect of these matters. We do not believe that the ultimate resolution of these matters will have a material adverse impact on our consolidated financial position, cash flows or results of operations.

We are subject to a number of U.S., federal, state and local laws and regulations, as well as the laws and regulations applicable in each foreign country or jurisdiction in which we do business. These laws and regulations govern, among other things, the composition, packaging, labeling and safety of the products we sell, the methods we use to sell these products and the methods we use to import these products. We believe that we are in material compliance with such laws and regulations, although no assurance can be provided that this will remain true going forward.

Item 1A. Risk Factors

In addition to the other information set forth in this Quarterly Report, you should carefully consider the factors contained in Item 1A. “Risk Factors” in Part I of our Annual Report on Form 10-K for the fiscal year ended September 30, 2025, which could materially affect our business, financial condition or future results. There have been no material changes from the risk factors disclosed in such Annual Report. The risks described in such Annual Report and herein are not the only risks facing our company.

Item 2. Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities

Information regarding shares of common stock we repurchased during the quarter ended March 31, 2026, excluding the impact of excise taxes, is as follows:


Fiscal Period	Total Number of Shares Purchased (1)		Average Price Paid per Share (2)		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (1)(3)		Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs
Jan 1 - Jan 31, 2026		541,565	$	15.38		541,565	$	438,301,556
Feb 1 - Feb 28, 2026		500,967		15.95		500,967		430,310,537
Mar 1 - Mar 31, 2026		618,465		14.61		618,465		421,276,242
Total this quarter		1,660,997	$	15.26		1,660,997	$	421,276,242

(1)

The table above does not include 571 shares of our common stock surrendered by grantees during the quarter to satisfy tax withholding obligations due upon the vesting of equity-based awards under our share-based compensation plans.

(2)

The calculation of the average price paid per share includes the impact of commissions paid in connection with the shares repurchased.

(3)

In May 2025, our Board approved a term extension through September 30, 2029, of our share repurchase program to repurchase up to $1.0 billion of our common stock, which was originally approved in August 2017.

Item 5. Other Information

During the quarter ended March 31, 2026, no director or officer of the Company adopted, modified, or terminated any Rule 10b5-1 trading arrangement or non-Rule 10b5-1 trading arrangement, as such terms are defined in Item 408(a) of Regulation S-K.

Item 6. Exhibits


Exhibit No.		Description

3.1		Third Restated Certificate of Incorporation of Sally Beauty Holdings, Inc., dated January 30, 2014, which is incorporated herein by reference from Exhibit 3.3 to the Company’s Current Report on Form 8-K filed on January 30, 2014

3.2		Amended and Restated By-Laws of Sally Beauty Holdings, Inc., dated July 2, 2025, which is incorporated herein by reference from Exhibit 3.1 to the Company’s Current Report on Form 8-K filed on July 9, 2025

10.1*		Separation Agreement between Marlo Cormier and Sally Beauty Supply LLC, dated March 31, 2026

22*		List of Subsidiary Guarantors

31.1*		Rule 13a-14(a)/15d-14(a) Certification of Denise Paulonis

31.2*		Rule 13a-14(a)/15d-14(a) Certification of Adrianne Lee

32.1*		Section 1350 Certification of Denise Paulonis

32.2*		Section 1350 Certification of Adrianne Lee

101		The following financial information from our Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2026, formatted in iXBRL (Inline Extensible Business Reporting Language): (i) the Condensed Consolidated Balance Sheets; (ii) the Condensed Consolidated Statements of Earnings; (iii) the Condensed Consolidated Statements of Comprehensive Income; (iv) the Condensed Consolidated Statements of Stockholders’ Equity; (v) the Condensed Consolidated Statements of Cash Flows; and (vi) the Notes to Condensed Consolidated Financial Statements.

104		The cover page from our Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2026, formatted in iXBRL (contained in Exhibit 101).

* Included herewith

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


		SALLY BEAUTY HOLDINGS, INC.
		(Registrant)

Date: May 11, 2026

	By:	/s/ Adrianne Lee
		Adrianne Lee
		Senior Vice President, Chief Financial Officer
		For the Registrant and as its Principal Financial Officer