Sally Beauty (SBH)

What Moves the Stock

1. 01Same-store sales (comp sales) trends across Sally Beauty Supply and BSG channels - positive comps signal market share gains and pricing power
2. 02Gross margin trajectory driven by product mix shift (color vs. care), private label penetration, and promotional intensity
3. 03Store rationalization progress - closure of underperforming locations and lease renegotiations to improve four-wall economics
4. 04E-commerce penetration rate and digital customer acquisition costs relative to brick-and-mortar
5. 05Professional salon activity levels and stylist employment trends (BSG channel sensitivity)
6. 06Capital allocation decisions including share repurchases, dividend policy, and debt reduction given 0.65x leverage
7. 07Sally Beauty Supply retail stores (~60-65% of revenue): hair color, care products, styling tools sold to consumers and salon professionals
8. 08Beauty Systems Group (~35-40% of revenue): full-service distribution to salons and professionals with exclusive brands

SBH Chart

My Notes

• value - The stock trades at 0.4x price/sales and 5.1x EV/EBITDA, well below specialty retail peers…
• Rising interest rates have moderate negative impact through two channels: (1) higher borrowing costs on the company's variable-rate debt…
• Watch on earnings: US retail sales excluding autos (RSXFS) as proxy for consumer discretionary spending power, Consumer sentiment index (UMCSENT) predicting willingness to spend on beauty products and salon services, Unemployment rate (UNRATE) correlating with salon traffic, professional stylist employment, and BSG channel demand.