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Sally Beauty Holdings, Inc. (SBH)

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Shares of Sally Beauty Holdings have not only declined in the past three months but have also underperformed the industry. The dismal run may be attributed to the company’s negative earnings surprise in the second quarter of fiscal 2018, following an earnings beat in the preceding quarter. Further, declining comps and margin contraction also hurt investors. These factors compelled management to trim fiscal 2018 view. Nevertheless, Sally Beauty is adopting several initiatives to stoke top-line growth. The company is focusing on defensible core categories — hair color and hair care — and has been undertaking strategic acquisitions, the latest being H. Chalut Ltée. Under its Restructuring Plan, the company completed most of its international initiatives in the second quarter. Along with this, the company plans to lower headcounts at its corporate headquarters. This is likely to generate annualized benefits of $14-$15 million.


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