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Sally Beauty Holdings, Inc. (NYSE:SBH) Q2 2024 Earnings Call Transcript

Sally Beauty Holdings, Inc. (NYSE:SBH) Q2 2024 Earnings Call Transcript May 10, 2024

Sally Beauty Holdings, Inc. isn’t one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).

Operator: Good morning, everyone and welcome to the Sally Beauty Holdings Conference Call to discuss the company’s Second Quarter Fiscal 2024 Results. [Operator Instructions] Now I would like to turn the call over to Jeff Harkins, Vice President of Investor Relations and Treasurer for Sally Beauty Holdings. Please go ahead.

Jeff Harkins: Thank you. Good morning, everyone and thank you for joining us. With me on the call today are Denise Paulonis, President and Chief Executive Officer; and Marlo Cormier, Chief Financial Officer. Before we begin, I’d like to remind everyone that management’s remarks on this call may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those indicated by these forward-looking statements as a result of various important factors, including those discussed in the risk factors section of our most recent annual report on Form 10-K and other filings with the SEC. Any forward-looking statements made on this call represent our views only as of today, and we undertake no obligations to update them.

A customer in a franchised store trying out hair color products.
A customer in a franchised store trying out hair color products.

The company has provided a detailed explanation and reconciliations of its adjusting items and non-GAAP financial measures in its earnings press release and on its website. Now I’d like to turn the call over to Denise to begin the formal remarks.

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Denise Paulonis: Thank you, Jeff, and good morning, everyone. Our teams navigated dynamic sales trends during the second quarter while continuing to execute against our strategic priorities and deliver engaging experiences for our customers. Net sales came in at the lower end of our expectations at $908 million, down 1% and comparable sales declined 1.5%. Our sales results reflect notable strength and momentum in our BSG segment, offset by softer sales performance at Sally amidst weather challenges in January and ongoing customer frugality. Adjusted gross margin was 51%, which came in lower than we anticipated due to higher promotional penetration as well as an unfavorable sales mix shift out of our highest margin Sally U.S. business.

. We continue to execute solid cost controls with adjusted SG&A of 1% versus last year, in line with our expectations. The business generated solid cash flow from operations of $37 million, allowing us to return value to shareholders via continued share repurchase activity. We also strengthened the balance sheet with the refinancing of our 2025 senior unsecured notes. More on that later from Marlo. Let’s take a look at performance by segment. At BSG, Q2 comparable sales were up 2%, a bit ahead of our expectations. This represents the second consecutive quarter of positive comps and reflects continuing improvement in salon demand trends paired with a robust flow of product innovation. Comparable transactions increased 2% and average ticket value was flat to the prior year.

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To continue reading the Q&A session, please click here.