| Segment Reporting |
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):
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` |
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Three Months Ended March 31, 2026 |
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Three Months Ended March 31, 2025 |
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Sally |
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BSG |
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Total |
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Sally |
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BSG |
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Total |
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Net sales (a) |
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$ |
521,236 |
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$ |
382,146 |
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$ |
903,382 |
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$ |
500,575 |
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$ |
382,571 |
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$ |
883,146 |
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Less: (b) |
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Cost of goods sold |
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201,904 |
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225,706 |
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427,610 |
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194,178 |
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230,151 |
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424,329 |
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Selling, general, and administrative expenses |
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241,183 |
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109,072 |
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350,255 |
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229,092 |
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108,486 |
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337,578 |
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Segment operating earnings |
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78,149 |
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47,368 |
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125,517 |
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77,305 |
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43,934 |
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121,239 |
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Unallocated expenses (c) |
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53,586 |
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51,866 |
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Interest expense |
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14,165 |
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16,289 |
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Earnings before provision for income taxes |
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$ |
57,766 |
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$ |
53,084 |
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` |
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Six Months Ended March 31, 2026 |
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Six Months Ended March 31, 2025 |
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Sally |
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BSG |
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Total |
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Sally |
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BSG |
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Total |
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Net sales (a) |
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$ |
1,052,837 |
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$ |
793,713 |
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$ |
1,846,550 |
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$ |
1,026,021 |
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$ |
795,020 |
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$ |
1,821,041 |
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Less: (b) |
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Cost of goods sold |
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415,563 |
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471,956 |
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887,519 |
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406,368 |
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479,016 |
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885,384 |
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Selling, general, and administrative expenses |
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481,228 |
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220,482 |
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701,710 |
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462,474 |
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221,601 |
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684,075 |
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Segment operating earnings |
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156,046 |
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101,275 |
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257,321 |
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157,179 |
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94,403 |
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251,582 |
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Unallocated expenses (c) |
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109,455 |
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81,889 |
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Interest expense |
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28,785 |
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33,731 |
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Earnings before provision for income taxes |
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$ |
119,081 |
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$ |
135,962 |
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(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 $26.6 million gain related to the sale of our corporate headquarters. See Note 7, Property and Equipment, Net, for more information.
Other Segment Disclosures
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Three Months Ended March 31, |
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Six Months Ended March 31, |
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(in thousands) |
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2026 |
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2025 |
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2026 |
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2025 |
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Depreciation and amortization: |
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Sally |
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$ |
14,306 |
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$ |
14,074 |
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$ |
27,738 |
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$ |
28,732 |
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BSG |
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9,006 |
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9,765 |
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17,680 |
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18,252 |
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Unallocated |
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1,968 |
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1,520 |
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3,494 |
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3,940 |
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Total |
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$ |
25,280 |
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$ |
25,359 |
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$ |
48,912 |
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$ |
50,924 |
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Disaggregation of net sales by segment The following tables disaggregate our segment revenues by merchandise category.
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Three Months Ended March 31, |
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Six Months Ended March 31, |
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Sally |
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2026 |
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2025 |
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2026 |
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2025 |
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Hair color |
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45.1 |
% |
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42.3 |
% |
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44.0 |
% |
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41.3 |
% |
Hair care |
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21.5 |
% |
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23.6 |
% |
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21.8 |
% |
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23.7 |
% |
Styling tools and supplies |
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16.1 |
% |
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16.2 |
% |
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16.7 |
% |
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16.8 |
% |
Nail |
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9.9 |
% |
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10.0 |
% |
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9.9 |
% |
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10.0 |
% |
Skin and cosmetics |
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7.1 |
% |
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7.4 |
% |
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7.3 |
% |
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7.6 |
% |
Other beauty items |
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0.3 |
% |
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0.5 |
% |
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0.3 |
% |
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0.6 |
% |
Total |
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100.0 |
% |
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100.0 |
% |
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100.0 |
% |
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100.0 |
% |
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Three Months Ended March 31, |
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Six Months Ended March 31, |
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BSG |
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2026 |
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2025 |
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2026 |
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2025 |
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Hair color |
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43.8 |
% |
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42.8 |
% |
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42.7 |
% |
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41.4 |
% |
Hair care |
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40.8 |
% |
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40.9 |
% |
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41.8 |
% |
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41.9 |
% |
Styling tools and supplies |
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10.1 |
% |
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10.5 |
% |
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10.1 |
% |
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10.6 |
% |
Skin and cosmetics |
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2.9 |
% |
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3.4 |
% |
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3.2 |
% |
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3.6 |
% |
Nail |
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2.1 |
% |
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2.2 |
% |
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2.0 |
% |
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2.3 |
% |
Other beauty items |
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0.3 |
% |
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0.2 |
% |
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0.2 |
% |
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0.2 |
% |
Total |
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100.0 |
% |
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100.0 |
% |
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100.0 |
% |
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100.0 |
% |
The following tables disaggregate our segment revenue by sales channels:
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Three Months Ended March 31, |
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Six Months Ended March 31, |
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Sally |
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2026 |
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2025 |
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2026 |
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2025 |
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Company-operated stores |
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90.3 |
% |
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91.8 |
% |
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90.4 |
% |
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92.0 |
% |
E-commerce |
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9.7 |
% |
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8.2 |
% |
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9.6 |
% |
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8.0 |
% |
Total |
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100.0 |
% |
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100.0 |
% |
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100.0 |
% |
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100.0 |
% |
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Three Months Ended March 31, |
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Six Months Ended March 31, |
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BSG |
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2026 |
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2025 |
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2026 |
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2025 |
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Company-operated stores |
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69.3 |
% |
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69.3 |
% |
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69.3 |
% |
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69.4 |
% |
E-commerce |
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14.9 |
% |
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13.9 |
% |
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14.8 |
% |
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14.0 |
% |
Salon business consultants |
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8.4 |
% |
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9.3 |
% |
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8.5 |
% |
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9.5 |
% |
Franchise stores |
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7.4 |
% |
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7.5 |
% |
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7.4 |
% |
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7.1 |
% |
Total |
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100.0 |
% |
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100.0 |
% |
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100.0 |
% |
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100.0 |
% |
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