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Can Sally Beauty's Fuel for Growth Savings Sustain Margin Momentum?
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Key Takeaways
SBH's adjusted gross margin expanded 40 basis points to 52.4%, driven by higher product margins.
Fuel for Growth delivered $9 million in benefits in the third quarter, with $2 million in SG&A cost offsets.
SBH remains on track for $45 million in 2026 savings, bringing three-year savings to about $120 million.
Sally Beauty Holdings, Inc. (SBH - Free Report) highlighted that its Fuel for Growth program is delivering benefits across gross margin and SG&A expenses, supporting gross-margin performance and cost management. In the third quarter of 2026, the company captured $9 million in pre-tax Fuel for Growth benefits across these areas.
The company maintained healthy gross profit in the quarter, with adjusted gross margin expanding 40 basis points year over year to 52.4%. The improvement was primarily driven by higher product margins resulting from the Fuel for Growth program. The Fuel for Growth benefits are contributing to improved margin performance, while gross profit remained healthy in the quarter.
The margin benefits of the program were visible across both operating segments. The Sally segment saw its gross margin expand 60 basis points to 61.5%, while segment operating margin increased 80 basis points to 16.6%. Similarly, the BSG segment's gross margin expanded 70 basis points to 40.1%, primarily driven by higher product margins from Fuel for Growth. On the expense side, Fuel for Growth provided $2 million in SG&A cost offsets in the third quarter, helping absorb increases in labor and rent expenses.
For fiscal 2026, Sally Beauty remains on track to deliver approximately $45 million in savings. Achieving this target would bring the program to approximately $120 million in cumulative run-rate savings over the three-year period. Overall, the program continues to support gross-margin performance and SG&A cost management across the business.
The Zacks Rundown for SBH
Shares of this Zacks Rank #3 (Hold) company have gained 16.5% in the past six months against the industry’s 1.6% decline.
Image Source: Zacks Investment Research
From a valuation standpoint, SBH trades at a forward price-to-earnings ratio of 7.02, lower than the industry’s average of 14.91.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for SBH’s current and next fiscal year earnings implies a year-over-year rise of approximately 9% each.
Image Source: Zacks Investment Research
Stocks to Consider
Some better-ranked stocks have been discussed below:
The Zacks Consensus Estimate for FIVE’s current fiscal-year sales and earnings implies growth of 18.7% and 55.2%, respectively, from the year-ago figures. FIVE delivered a trailing four-quarter earnings surprise of 70.1%, on average.
Fossil Group, Inc. (FOSL - Free Report) designs, develops, markets, and distributes consumer fashion accessories in the United States, Europe, Asia, and internationally. At present, FOSL carries a Zacks Rank of 2 (Buy).
The Zacks Consensus Estimate for FOSL’s current fiscal-year sales indicates a decline of 4%, while the same for earnings indicates growth of 96.7% from the year-ago figures. FOSL delivered a trailing four-quarter negative earnings surprise of 236.2%, on average.
ITOCHU Corporation (ITOCY - Free Report) trades and imports/exports various products worldwide. At present, ITOCY carries a Zacks Rank of 2.
The Zacks Consensus Estimate for ITOCY’s current fiscal-year sales and earnings implies growth of 1.8% and 8.2%, respectively, from the year-ago figures.
View the Zacks #1 Rank List
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Can Sally Beauty's Fuel for Growth Savings Sustain Margin Momentum?
Key Takeaways
Sally Beauty Holdings, Inc. (SBH - Free Report) highlighted that its Fuel for Growth program is delivering benefits across gross margin and SG&A expenses, supporting gross-margin performance and cost management. In the third quarter of 2026, the company captured $9 million in pre-tax Fuel for Growth benefits across these areas.
The company maintained healthy gross profit in the quarter, with adjusted gross margin expanding 40 basis points year over year to 52.4%. The improvement was primarily driven by higher product margins resulting from the Fuel for Growth program. The Fuel for Growth benefits are contributing to improved margin performance, while gross profit remained healthy in the quarter.
The margin benefits of the program were visible across both operating segments. The Sally segment saw its gross margin expand 60 basis points to 61.5%, while segment operating margin increased 80 basis points to 16.6%.
Similarly, the BSG segment's gross margin expanded 70 basis points to 40.1%, primarily driven by higher product margins from Fuel for Growth. On the expense side, Fuel for Growth provided $2 million in SG&A cost offsets in the third quarter, helping absorb increases in labor and rent expenses.
For fiscal 2026, Sally Beauty remains on track to deliver approximately $45 million in savings. Achieving this target would bring the program to approximately $120 million in cumulative run-rate savings over the three-year period. Overall, the program continues to support gross-margin performance and SG&A cost management across the business.
The Zacks Rundown for SBH
Shares of this Zacks Rank #3 (Hold) company have gained 16.5% in the past six months against the industry’s 1.6% decline.
Image Source: Zacks Investment Research
From a valuation standpoint, SBH trades at a forward price-to-earnings ratio of 7.02, lower than the industry’s average of 14.91.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for SBH’s current and next fiscal year earnings implies a year-over-year rise of approximately 9% each.
Image Source: Zacks Investment Research
Stocks to Consider
Some better-ranked stocks have been discussed below:
Five Below, Inc. (FIVE - Free Report) operates as a specialty value retailer in the United States. Five Below currently carries a Zacks Rank of 1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for FIVE’s current fiscal-year sales and earnings implies growth of 18.7% and 55.2%, respectively, from the year-ago figures. FIVE delivered a trailing four-quarter earnings surprise of 70.1%, on average.
Fossil Group, Inc. (FOSL - Free Report) designs, develops, markets, and distributes consumer fashion accessories in the United States, Europe, Asia, and internationally. At present, FOSL carries a Zacks Rank of 2 (Buy).
The Zacks Consensus Estimate for FOSL’s current fiscal-year sales indicates a decline of 4%, while the same for earnings indicates growth of 96.7% from the year-ago figures. FOSL delivered a trailing four-quarter negative earnings surprise of 236.2%, on average.
ITOCHU Corporation (ITOCY - Free Report) trades and imports/exports various products worldwide. At present, ITOCY carries a Zacks Rank of 2.
The Zacks Consensus Estimate for ITOCY’s current fiscal-year sales and earnings implies growth of 1.8% and 8.2%, respectively, from the year-ago figures.