On this page of StockholderLetter.com we present the latest annual shareholder letter from Sally Beauty Holdings, Inc. — ticker symbol SBH. Reading current and past SBH letters to shareholders can bring important insights into the investment thesis.
2025 ANNUAL REPORT SALLY BEAUTY HOLDINGS, INC.
D E A R FE LLOW S H A R E H O LD E RS Fiscal 2025 was a strong year for our company, highlighted by strong operating and nancial performance in the context of a rapidly changing and uncertain macro environment. We are pleased with the momentum we nished the year with while delivering full year nancial results that exceeded our expectations. These results are a testament to the incredible execution of our teams across the globe and demonstrate the underlying strength of our business model. FISCAL YEAR 2025 HIGHLIGHTS For scal 2025, we delivered consolidated net sales of $3.7 billion, including global e-commerce sales that grew 9% to $397 million and represented 11% of total net sales. Additionally, our gross margin remained healthy at 52%, which helped drive GAAP operating earnings of $328 million and GAAP operating margin of 8.9%. GAAP diluted net earnings per share came in at $1.89, representing growth of over 30% versus last year. Importantly, our core strategic pillars drove customer engagement and sales, contributing approximately 260 basis points of sales growth for the full year. This performance enabled us to generate strong cash flow from operations of $275 million, which we deployed toward investing for growth, further strengthening our balance sheet with $119 million of debt reduction and returning value to shareholders through more than $50 million of share repurchases. I want to highlight a few of our operational successes from 2025: We maintained our leadership position in hair color, delivering growth of 4% for scal 2025. We delivered on our promise of customer centricity, driving strong growth in our Licensed Colorist on Demand consultation service by delivering standout education and advice. We extended our reach and fueled digital growth with the expansion of our marketplaces strategy, adding Uber Eats to our already strong roster of partners, which includes Doordash, Instacart, Amazon and Walmart. We delivered a continuous pipeline of product innovation, adding new powerhouse brands like K18 at Beauty Systems Group ( BSG ), and expanding our partnership with Sauce Beauty as well as adding newness in color from Wella and Iroiro at Sally. We launched a comprehensive Sally brand refresh, which we are now calling Sally Ignited, designed to transform the business from a trusted beauty supplier to a modern, dynamic beauty powerhouse. We generated an incremental $46 million of bene ts through our Fuel for Growth Program in scal 2025, building our cumulative runrate bene ts to $74 million. Of that cumulative total, approximately $42 million flowed to the bottom line with the remaining $32 million being reinvested in the business. And lastly, we were responsible stewards of capital, focused on building long-term value for all of our stakeholders. LOOKING AHEAD TO FISCAL YEAR 2026 Entering scal 2026, we have proven our ability to navigate a complex and dynamic external backdrop, and we will continue to execute, leveraging the power of our competitive and structural advantages, our global scale, our compelling value proposition, and the strong fundamentals of our business to drive top- and bottom-line growth. Our teams will focus on actioning four key growth drivers: Understanding and Activating the Customer Unlocking and Harvesting Digital Value Differentiating with Product Assortment and Innovation Accelerating New Growth Pathways First, our Customer Activation strategy is focused on acquisition, retention and share of wallet. Much of our success is rooted in our customer-centric capabilities. We have always been intensely focused on delivering unmatched levels of education, service and advice. By leveraging our rich customer data, advanced analytics such as our enhanced media mix model, and robust customer research, we can better target high-potential segments. This will enable us to improve customer engagement across touchpoints that include performance marketing and personalization at both Sally and BSG, as well as our refreshed brand marketing and our Licensed Colorist on Demand offering at Sally. Second, our Digital strategy is focused on enhancing business performance and reaching new markets. For Sally, there is a clear opportunity to build on the momentum of our marketplace success. Our teams are focused on unlocking greater digital value through marketplace expansion, leveraging our speed to market delivery capabilities and strengthening our digital foundation. On the BSG side, we are targeting the spring of 2026 for a substantial update to our mobile app and ecommerce platform designed to deliver improved user experience and enhanced personalization, which we believe will drive higher conversion, increase retention and engagement, and enhance brand loyalty. Third, our strategy around Product Assortment and Innovation is focused on differentiation. For our Sally segment, we are focused on driving multi-category performance by continuing to bring in new brands and products, while expanding and nurturing categories beyond color. One example includes adding fragrances as a new category in our top 1,000 Sally US stores this year. For the BSG segment, we have another exciting lineup of innovation coming focused on key trends like glossing, blonding, smoothing, molecular repair and scalp care. Lastly, our strategy for New Growth Pathways includes opportunities for both of our business segments. For Sally, we view Sally Ignited as a game changer for our platform going forward. Sally Ignited is a comprehensive initiative encompassing both physical and digital refreshes, category and brand expansion, and immersive experiences focused on discovery and community. We see a tremendous opportunity to supercharge a fundamentally better store experience. Our mission is to ensure that the Sally brand emotionally connects with our customers while creating a discovery-focused, omni-channel specialty beauty experience all enabling us to more effectively compete in today s product-obsessed beauty marketplace. For our BSG business, this entails expanding BSG s addressable market by entering adjacent product categories either organically or through acquisition. We recently began testing a couple of brands in the skin and spa space while pursuing aestheticians. In summary, our foundation is strong and our focus is clear. Our scal 2025 performance underpins our con dence that we have the strategy, capabilities, and teams in place to scale and win with signi cant runway for growth and value creation. We appreciate your ongoing support. Best Regards, Denise Paulonis President and Chief Executive Officer
 • shareholder letter icon 12/10/2025 Letter Continued (Full PDF)
 • stockholder letter icon 12/13/2023 SBH Stockholder Letter
 • stockholder letter icon 12/11/2024 SBH Stockholder Letter
 • stockholder letter icon More "Specialty Retail" Category Stockholder Letters
 • Benford's Law Stocks icon SBH Benford's Law Stock Score = 72


SBH Shareholder/Stockholder Letter Transcript:

2025
ANNUAL
REPORT
SALLY BEAUTY HOLDINGS, INC.

D E A R FE LLOW S H A R E H O LD E RS
Fiscal 2025 was a strong year for our company, highlighted by strong
operating and    nancial performance in the context of a rapidly
changing and uncertain macro environment. We are pleased with
the momentum we    nished the year with while delivering full year
   nancial results that exceeded our expectations. These results are a
testament to the incredible execution of our teams across the globe
and demonstrate the underlying strength of our business model.
FISCAL YEAR 2025 HIGHLIGHTS
For    scal 2025, we delivered consolidated net sales of $3.7 billion,
including global e-commerce sales that grew 9% to $397 million
and represented 11% of total net sales. Additionally, our gross margin
remained healthy at 52%, which helped drive GAAP operating
earnings of $328 million and GAAP operating margin of 8.9%. GAAP
diluted net earnings per share came in at $1.89, representing growth
of over 30% versus last year. Importantly, our core strategic pillars
drove customer engagement and sales, contributing approximately
260 basis points of sales growth for the full year. This performance
enabled us to generate strong cash flow from operations of
$275 million, which we deployed toward investing for growth, further
strengthening our balance sheet with $119 million of debt reduction
and returning value to shareholders through more than $50 million
of share repurchases.
I want to highlight a few of our operational successes from 2025:
    We maintained our leadership position in hair color, delivering
growth of 4% for    scal 2025.
    We delivered on our promise of customer centricity, driving strong
growth in our Licensed Colorist on Demand consultation service
by delivering standout education and advice.
    We extended our reach and fueled digital growth with the
expansion of our marketplaces strategy, adding Uber Eats to
our already strong roster of partners, which includes Doordash,
Instacart, Amazon and Walmart.
    We delivered a continuous pipeline of product innovation, adding
new powerhouse brands like K18 at Beauty Systems Group (   BSG   ),
and expanding our partnership with Sauce Beauty as well as
adding newness in color from Wella and Iroiro at Sally.
    We launched a comprehensive Sally brand refresh, which we are
now calling Sally Ignited, designed to transform the business from a
trusted beauty supplier to a modern, dynamic beauty powerhouse.
    We generated an incremental $46 million of bene   ts through our
Fuel for Growth Program in    scal 2025, building our cumulative runrate bene   ts to $74 million. Of that cumulative total, approximately
$42 million flowed to the bottom line with the remaining $32 million
being reinvested in the business.
    And lastly, we were responsible stewards of capital, focused on
building long-term value for all of our stakeholders.
LOOKING AHEAD TO FISCAL YEAR 2026
Entering    scal 2026, we have proven our ability to navigate a complex
and dynamic external backdrop, and we will continue to execute,
leveraging the power of our competitive and structural advantages,
our global scale, our compelling value proposition, and the strong
fundamentals of our business to drive top- and bottom-line growth.
Our teams will focus on actioning four key growth drivers:



Understanding and Activating the Customer
Unlocking and Harvesting Digital Value
Differentiating with Product Assortment and Innovation
Accelerating New Growth Pathways
First, our Customer Activation strategy is focused on acquisition,
retention and share of wallet. Much of our success is rooted in our
customer-centric capabilities. We have always been intensely focused
on delivering unmatched levels of education, service and advice. By
leveraging our rich customer data, advanced analytics such as our
enhanced media mix model, and robust customer research, we can
better target high-potential segments. This will enable us to improve
customer engagement across touchpoints that include performance
marketing and personalization at both Sally and BSG, as well as our
refreshed brand marketing and our Licensed Colorist on Demand
offering at Sally.
Second, our Digital strategy is focused on enhancing business
performance and reaching new markets. For Sally, there is a clear
opportunity to build on the momentum of our marketplace success.
Our teams are focused on unlocking greater digital value through
marketplace expansion, leveraging our speed to market delivery
capabilities and strengthening our digital foundation. On the BSG side,
we are targeting the spring of 2026 for a substantial update to our
mobile app and ecommerce platform designed to deliver improved
user experience and enhanced personalization, which we believe
will drive higher conversion, increase retention and engagement, and
enhance brand loyalty.
Third, our strategy around Product Assortment and Innovation is
focused on differentiation. For our Sally segment, we are focused on
driving multi-category performance by continuing to bring in new
brands and products, while expanding and nurturing categories
beyond color. One example includes adding fragrances as a new
category in our top 1,000 Sally US stores this year. For the BSG
segment, we have another exciting lineup of innovation coming
focused on key trends like glossing, blonding, smoothing, molecular
repair and scalp care.
Lastly, our strategy for New Growth Pathways includes opportunities
for both of our business segments. For Sally, we view Sally Ignited as
a game changer for our platform going forward. Sally Ignited is a
comprehensive initiative encompassing both physical and digital
refreshes, category and brand expansion, and immersive experiences
focused on discovery and community. We see a tremendous
opportunity to supercharge a fundamentally better store experience.
Our mission is to ensure that the Sally brand emotionally connects with
our customers while creating a discovery-focused, omni-channel
specialty beauty experience     all enabling us to more effectively
compete in today   s product-obsessed beauty marketplace. For our
BSG business, this entails expanding BSG   s addressable market by
entering adjacent product categories either organically or through
acquisition. We recently began testing a couple of brands in the skin
and spa space while pursuing aestheticians.
In summary, our foundation is strong and our focus is clear. Our
   scal 2025 performance underpins our con   dence that we have
the strategy, capabilities, and teams in place to scale and win with
signi   cant runway for growth and value creation.
We appreciate your ongoing support.
Best Regards,
Denise Paulonis
President and Chief Executive Officer



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