Q4 and FY2026
Filed Nov 10, 2026Q4 net sales up 0.6% to $952,527 thousand, comparable sales up 0.9%, GAAP diluted EPS up 22.4% to $0.60; FY2026 GAAP diluted EPS $2.02 (up 6.9%) and adjusted diluted EPS $2.08; FY2027 guidance provided
Q4 GAAP and adjusted operating margin and EPS improved, and consolidated comparable sales stayed positive, but Bean Systems Group (BSG) sales and comparable sales declined, Q4 free cash flow fell 39.9%, and full-year GAAP operating earnings declined 0.4%.
Key metrics
shortened, hover for the filing’s print| Metric | Value | q/q | y/y |
|---|---|---|---|
| Q4 FY2026 Net salesGAAP | $952.5M | – | 0.6% |
| FY2026 Net salesGAAP | $3.73B | – | 0.9% |
| Q4 FY2026 Consolidated comparable sales growthother | 0.9% | – | (40) bps |
| FY2026 Consolidated comparable sales growthother | 0.5% | – | 20 bps |
| Q4 FY2026 Global e-commerce salesother | $113M | – | increased 8% |
| FY2026 Global e-commerce salesother | $441M | – | increased 10% |
| Q4 FY2026 Cost of products soldGAAP | $458.1M | – | 1.1% |
| FY2026 Cost of products soldGAAP | $1.79B | – | —% |
| Q4 FY2026 Gross profitGAAP | $494.4M | – | 0.1% |
| FY2026 Gross profitGAAP | $1.94B | – | 1.7% |
| Q4 FY2026 Consolidated gross marginGAAP | 51.9% | – | (30) bps |
| FY2026 Consolidated gross marginGAAP | 52.0% | – | 40 bps |
| Q4 FY2026 Adjusted gross marginnon-GAAP | 51.9% | – | – |
| FY2026 Adjusted gross marginnon-GAAP | 52.1% | – | expansion of 40 basis points |
| Q4 FY2026 Selling, general and administrative expensesGAAP | $402.3M | – | (2.9)% |
| FY2026 Selling, general and administrative expensesGAAP | $1.62B | – | 2.2% |
| Q4 FY2026 SG&A as a percentage of net salesGAAP | 42.2% | – | (150) bps |
| FY2026 SG&A as a percentage of net salesGAAP | 43.3% | – | 50 bps |
| Q4 FY2026 Adjusted SG&A expensesnon-GAAP | $399.9M | – | decrease of $5 million |
| FY2026 Adjusted SG&A expensesnon-GAAP | $1.61B | – | increase of $25 million |
| Q4 FY2026 Operating earningsGAAP | $92.19M | – | 15.3% |
| FY2026 Operating earningsGAAP | $326.5M | – | (0.4)% |
| Q4 FY2026 GAAP operating marginGAAP | 9.7% | – | 130 bps |
| FY2026 GAAP operating marginGAAP | 8.7% | – | (20) bps |
| Q4 FY2026 Adjusted operating earningsnon-GAAP | $94.82M | – | – |
| FY2026 Adjusted operating earningsnon-GAAP | $334.3M | – | – |
| Q4 FY2026 Adjusted operating marginnon-GAAP | 10.0% | – | 60 bps |
| FY2026 Adjusted operating marginnon-GAAP | 9.0% | – | 10 bps |
| Q4 FY2026 Interest expenseGAAP | $13.87M | – | (7.2)% |
| FY2026 Interest expenseGAAP | $56.35M | – | (12.5)% |
| Q4 FY2026 Earnings before provision for income taxesGAAP | $78.32M | – | 20.5% |
| FY2026 Earnings before provision for income taxesGAAP | $270.1M | – | 2.5% |
| Q4 FY2026 Provision for income taxesGAAP | $20.57M | – | 36.6% |
| FY2026 Provision for income taxesGAAP | $70.02M | – | 3.7% |
| Q4 FY2026 Effective tax rateGAAP | 26.3% | – | 310 bps |
| FY2026 Effective tax rateGAAP | 25.9% | – | 30 bps |
| Q4 FY2026 Net earningsGAAP | $57.74M | – | 15.6% |
| FY2026 Net earningsGAAP | $200.1M | – | 2.1% |
| Q4 FY2026 Adjusted net earningsnon-GAAP | $59.70M | – | – |
| FY2026 Adjusted net earningsnon-GAAP | $205.9M | – | – |
| Q4 FY2026 Diluted EPS (GAAP)GAAP | $0.60 | – | 22.4% |
| FY2026 Diluted EPS (GAAP)GAAP | $2.02 | – | 6.9% |
| Q4 FY2026 Basic EPS (GAAP)GAAP | $0.62 | – | 21.6% |
| FY2026 Basic EPS (GAAP)GAAP | $2.09 | – | 7.2% |
| Q4 FY2026 Adjusted diluted EPSnon-GAAP | $0.62 | – | 13% |
| FY2026 Adjusted diluted EPSnon-GAAP | $2.08 | – | 9% |
| Q4 FY2026 Adjusted EBITDAnon-GAAP | $126.0M | – | 7.3% |
| FY2026 Adjusted EBITDAnon-GAAP | $458.7M | – | 2.5% |
| Q4 FY2026 Adjusted EBITDA marginnon-GAAP | 13.2% | – | 80 bps |
| FY2026 Adjusted EBITDA marginnon-GAAP | 12.3% | – | 20 bps |
| Q4 FY2026 Cash flows from operating activitiesGAAP | $75.09M | – | (37.9)% |
| FY2026 Cash flows from operating activitiesGAAP | $322.6M | – | 17.4% |
| Q4 FY2026 Free cash flownon-GAAP | $46.91M | – | (39.9)% |
| FY2026 Free cash flownon-GAAP | $210.1M | – | (2.8)% |
| Q4 FY2026 Payments for capital expendituresGAAP | $28.18M | – | (34.3)% |
| FY2026 Payments for capital expendituresGAAP | $112.4M | – | 10.1% |
| Total consolidated stores as of September 30, 2026other | 4,390 | – | (32) |
| Cash and cash equivalents as of September 30, 2026GAAP | $158.2M | – | – |
| Long-term debt as of September 30, 2026GAAP | $784.0M | – | – |
| Total assets as of September 30, 2026GAAP | $2.90B | – | – |
| Total stockholders' equity as of September 30, 2026GAAP | $889.0M | – | – |
Segments
| Segment | Revenue | q/q | y/y |
|---|---|---|---|
| Sally Beauty Supply (Sally): Q4 FY2026 net salesQ4 segment comparable sales growth of 2.0% (prior year 1.2%); Q4 gross margin 60.6% (prior year 61.3%, (70) bps); operating earnings $88,433 thousand (prior year $86,183 thousand, 2.6%); operating margin 16.1% (prior year 15.9%, 20 bps). The filing does not state the reasons for these changes. | $550.3M | – | 1.6% |
| Sally Beauty Supply (Sally): FY2026 net salesFY2026 segment comparable sales growth of 1.5% (prior year 0.4%); gross margin 60.8% (flat); operating earnings $333,835 thousand (prior year $326,667 thousand, 2.2%); operating margin 15.6% (flat). | $2.14B | – | 2.3% |
| Beauty Systems Group (BSG): Q4 FY2026 net salesQ4 segment comparable sales decline of (0.6)% (prior year growth 1.4%, (200) bps); gross margin 40.0% (flat); operating earnings $51,896 thousand (prior year $51,286 thousand, 1.2%); operating margin 12.9% (prior year 12.6%, 30 bps). The filing does not state the reasons for these changes. | $402.2M | – | (0.8)% |
| Beauty Systems Group (BSG): FY2026 net salesFY2026 segment comparable sales decline of (0.8)% (prior year growth 0.2%, (100) bps); gross margin 40.3% (prior year 39.7%, 60 bps); operating earnings $202,144 thousand (prior year $196,361 thousand, 2.9%); operating margin 12.7% (prior year 12.2%, 50 bps). BSG total stores 1,328 (prior year 1,326). | $1.59B | – | (0.9)% |
FY2027 (initial full-year guidance) outlook
- RevenueConsolidated net sales $3.77 billion to $3.81 billion
- NoteComparable sales growth of 1% to 2%
- NoteAdjusted operating earnings $334 million to $347 million (non-GAAP)
- NoteAdjusted diluted EPS $2.20 to $2.30 (non-GAAP)
- NoteCapital expenditures approximately $140 million
- NoteFree cash flow approximately $200 million (non-GAAP; assumes 50% of free cash flow goes towards share repurchases)
- NoteFirst quarter FY2027 consolidated net sales $945 million to $955 million (assumes approximately 30 basis points of unfavorable impact from expected foreign currency rates)
- NoteFirst quarter FY2027 comparable sales growth of 0.5% to 1.5%
- NoteFirst quarter FY2027 adjusted operating earnings $75 million to $80 million (non-GAAP)
- NoteFirst quarter FY2027 adjusted diluted EPS $0.48 to $0.52 (non-GAAP; assumes 50% of free cash flow goes towards share repurchases)
- NoteThe company states that the fiscal 2027 guidance is in line with its financial algorithm (headline wording)
- NoteThe company does not provide a reconciliation of forward-looking non-GAAP measures to GAAP measures
Capital returns
- Q4 FY2026 share repurchases: 2.6 million shares at an aggregate cost of $42 million
- FY2026 share repurchases: $113 million
- Q4 FY2026 term loan B repayment: $20 million
- FY2026 term loan repayments: $80 million
- Company states its FY2026 cash flow was deployed to invest for growth, strengthen the balance sheet and return value to shareholders
- FY2027 guidance assumes 50% of free cash flow goes towards share repurchases
What drove it
- Company states that the quarter's sales, operating earnings and double-digit adjusted EPS growth reflect disciplined execution, new customer growth, digital and omnichannel expansion, product innovation and its long-term growth agenda (CEO statement)
- Global e-commerce sales increased 8% in Q4 and 10% for the full year, to 12% of net sales in both periods
- Adjusted SG&A decreased $5 million in Q4 versus the prior year; the filing lists the Fuel for Growth initiative, corporate headquarters relocation and asset impairment charges as adjustments to non-GAAP results
- Q4 SG&A as a percentage of net sales fell 150 bps to 42.2% (GAAP), and full-year adjusted gross margin expanded 40 bps to 52.1%
- Q4 Sally segment comparable sales grew 2.0% and operating margin rose 20 bps to 16.1%
- Q4 GAAP effective tax rate rose to 26.3% from 23.2%; the filing does not explain the change
Concerns
- BSG net sales declined in Q4 (0.8)% and for the year (0.9)%; BSG comparable sales were (0.6)% in Q4 and (0.8)% for the full year
- Q4 free cash flow fell 39.9% to $46,910 thousand and Q4 operating cash flow fell 37.9% to $75,095 thousand; the filing does not state the reason
- FY2026 GAAP operating earnings declined 0.4% to $326,453 thousand and GAAP operating margin declined 20 bps to 8.7%
- Consolidated comparable sales growth slowed to 0.9% in Q4 from 1.3% (40 bps) and BSG Q4 comparable sales moved from 1.4% to (0.6)%
- Consolidated store count fell by 32 to 4,390 stores; BSG salon business consultants fell by 36 to 547
- Q1 FY2027 guidance assumes approximately 30 basis points of unfavorable foreign currency impact
- Interest expense fell, but full-year GAAP net earnings grew only 2.1%
What to watch
- Delivery of FY2027 guidance: consolidated net sales $3.77 billion to $3.81 billion, comparable sales growth 1% to 2%, adjusted diluted EPS $2.20 to $2.30
- Q1 FY2027 guidance: net sales $945 million to $955 million, comparable sales growth 0.5% to 1.5%, adjusted diluted EPS $0.48 to $0.52
- BSG comparable sales trajectory after Q4 decline of (0.6)% and full-year decline of (0.8)%
- Free cash flow recovery against Q4 decline of 39.9% and FY2027 free cash flow guidance of approximately $200 million
- Capital expenditures of approximately $140 million in FY2027 versus $112,442 thousand in FY2026
- Share repurchase pace under the assumption that 50% of FY2027 free cash flow goes to repurchases
- E-commerce growth (8% in Q4, 10% for the year) and net debt leverage of 1.4x
Balance sheet and cash flow
- As of September 30, 2026: cash and cash equivalents $158,163 thousand; no outstanding borrowings under the asset-based revolving line of credit
- Inventory $1,001,222 thousand; the filing describes inventory as up 1% versus a year ago
- Net debt leverage ratio of 1.4x at the end of Q4 FY2026
- Current maturities of long-term debt $4,000 thousand (prior year $4,000 thousand)
- Total current liabilities $550,255 thousand (prior year $575,974 thousand)
- Total liabilities $2,014,353 thousand (prior year $2,076,889 thousand)
- Q4 FY2026 operating cash flow $75 million and free cash flow $47 million, as stated in the release text
- FY2026 operating cash flow $323 million and free cash flow $210 million, as stated in the release text
Analysis
Sally Beauty reported fourth-quarter net sales of $952,527 thousand, up 0.6% from $947,075 thousand, with consolidated comparable sales growth of 0.9%, against 1.3% in the prior-year quarter. The two segments moved in opposite directions. Sally Beauty Supply net sales rose 1.6% to $550,315 thousand on comparable sales growth of 2.0%, while Beauty Systems Group net sales fell 0.8% to $402,212 thousand on comparable sales of (0.6)%. For the full year, net sales rose 0.9% to $3,734,567 thousand, with Sally up 2.3% and BSG down 0.9%.
Margins improved in the quarter but not for the year. GAAP operating earnings rose 15.3% to $92,192 thousand and GAAP operating margin reached 9.7%, up 130 bps. SG&A as a percentage of sales fell 150 bps to 42.2%. Gross margin declined 30 bps to 51.9%. Adjusted operating margin was 10.0%, up 60 bps, with adjusted operating earnings of $94,821 thousand against $88,620 thousand in the prior-year quarter. For the full year, GAAP operating earnings declined 0.4% to $326,453 thousand and GAAP operating margin fell 20 bps to 8.7%, while adjusted operating margin rose 10 bps to 9.0%. Full-year adjusted gross margin expanded 40 bps to 52.1%.
Earnings per share grew faster than operating profit in the quarter. GAAP diluted EPS was $0.60, up 22.4%, and adjusted diluted EPS was $0.62, up 13%. The effective tax rate rose to 26.3% from 23.2% in the quarter, and provision for income taxes rose 36.6%; the filing does not explain that change. Full-year GAAP diluted EPS was $2.02 (up 6.9%) and adjusted diluted EPS was $2.08 (up 9%). The filing states that adjusted results exclude Fuel for Growth costs, corporate headquarters relocation expenses and asset impairment charges.
Cash generation weakened in the quarter. Operating cash flow was $75,095 thousand, down 37.9%, and free cash flow was $46,910 thousand, down 39.9%. For the year, operating cash flow rose 17.4% to $322,556 thousand, but free cash flow fell 2.8% to $210,114 thousand because capital expenditures rose 10.1%. The company used cash to repay $20 million of term loan B debt in Q4 ($80 million for the year), repurchase $42 million of stock in Q4 ($113 million for the year), and ended the year with $158,163 thousand of cash, no borrowings under its revolver and a net debt leverage ratio of 1.4x. The filing does not give a reason for the Q4 cash flow decline.
Guidance for FY2027 calls for net sales of $3.77 billion to $3.81 billion, comparable sales growth of 1% to 2%, adjusted operating earnings of $334 million to $347 million and adjusted diluted EPS of $2.20 to $2.30. The company says this is in line with its financial algorithm. Free cash flow is guided to approximately $200 million, with capital expenditures of approximately $140 million. Q1 FY2027 guidance is net sales of $945 million to $955 million, comparable sales growth of 0.5% to 1.5% and adjusted diluted EPS of $0.48 to $0.52, with approximately 30 basis points of unfavorable foreign currency impact assumed. No prior-period outlook was supplied, so guidance is not compared against earlier targets. The main points for readers are the BSG trend, the year-on-year decline in free cash flow and the rebuild of comparable sales growth in FY2027.
Management, verbatim
We finished fiscal 2026 with positive momentum, delivering fourth quarter sales, operating earnings and double-digit adjusted EPS growth,
Denise Paulonis, President and Chief Executive Officer
We generated $323 million of cash from operations, strengthened our balance sheet, and returned significant capital to shareholders while continuing to invest in our future.
Denise Paulonis, President and Chief Executive Officer
Not in the filing
stated, not guessed- Prior-year and prior-quarter figures for adjusted operating earnings growth in dollars (not printed as a percentage)
- Prior-year and yoy change for adjusted net earnings (not printed)
- Quarter-over-quarter figures (no prior-quarter results are printed in the filing)
- Previous guidance for comparison (no prior outlook was supplied)
- Consensus estimates, analyst expectations and share price reaction (not in the filing)
- Explanations for the Q4 decline in operating cash flow and free cash flow
- Explanation for the rise in the Q4 effective tax rate
- Reasons for the BSG comparable sales decline
- Prior-year FY2026 reconciliation of adjusted gross margin in dollars (margin only is printed)
- Prior-year cash flow and balance sheet figures for the full-year period beyond those printed
Written by an AI language model from the company’s SEC earnings filing (Form 8-K Item 2.02, or Form 6-K for a foreign private issuer). Every figure is checked against the filing text, and a metric the filing does not print, or whose value, prior period and change do not add up, is dropped from the metrics. The model can still misread a table, in the metrics or in the text, so check a number in the filing before you rely on it. Consensus estimates, price targets and share-price reactions are not shown because they are not in the filing. AI-generated research, not investment advice.