Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Dec. 31, 2022 | Jan. 27, 2023 | |
Cover [Abstract] | ||
Entity Registrant Name | SALLY BEAUTY HOLDINGS, INC. | |
Entity Central Index Key | 0001368458 | |
Document Type | 10-Q | |
Document Period End Date | Dec. 31, 2022 | |
Trading Symbol | SBH | |
Amendment Flag | false | |
Current Fiscal Year End Date | --09-30 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Shell Company | false | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity File Number | 1-33145 | |
Entity Tax Identification Number | 36-2257936 | |
Entity Address, Address Line One | 3001 Colorado Boulevard | |
Entity Address, City or Town | Denton | |
Entity Address, State or Province | TX | |
Entity Address, Postal Zip Code | 76210 | |
City Area Code | 940 | |
Local Phone Number | 898-7500 | |
Security Exchange Name | NYSE | |
Title of 12(b) Security | Common Stock, $0.01 par value | |
Entity Incorporation, State or Country Code | DE | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Entity Interactive Data Current | Yes | |
Entity Common Stock, Shares Outstanding | 107,328,599 | |
Document Fiscal Year Focus | 2023 | |
Document Fiscal Period Focus | Q1 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Dec. 31, 2022 | Sep. 30, 2022 |
Current assets: | ||
Cash and cash equivalents | $ 99,071 | $ 70,558 |
Trade accounts receivable, net | 32,671 | 34,102 |
Accounts receivable, other | 42,741 | 38,175 |
Inventory | 986,878 | 936,374 |
Other current assets | 57,840 | 53,192 |
Total current assets | 1,219,201 | 1,132,401 |
Property and equipment, net of accumulated depreciation of $849,202 at December 31, 2022, and $820,811 at September 30, 2022 | 288,732 | 297,876 |
Operating lease assets | 542,806 | 532,177 |
Goodwill | 532,514 | 526,066 |
Intangible assets, excluding goodwill, net of accumulated amortization of $28,820 at December 31, 2022, and $26,794 at September 30, 2022 | 50,963 | 50,315 |
Other assets | 34,330 | 38,032 |
Total assets | 2,668,546 | 2,576,867 |
Current liabilities: | ||
Current maturities of long-term debt | 65,171 | 68,658 |
Accounts payable | 296,170 | 275,717 |
Accrued liabilities | 142,785 | 161,065 |
Current operating lease liabilities | 156,168 | 157,734 |
Income taxes payable | 16,972 | 4,740 |
Total current liabilities | 677,266 | 667,914 |
Long-term debt | 1,082,175 | 1,083,043 |
Long-term operating lease liabilities | 427,168 | 424,762 |
Other liabilities | 22,748 | 22,427 |
Deferred income tax liabilities, net | 85,891 | 85,085 |
Total liabilities | 2,295,248 | 2,283,231 |
Stockholders’ equity: | ||
Common stock, $0.01 par value. Authorized 500,000 shares; 107,291 and 107,024 shares issued and 107,284 and 106,970 shares outstanding at December 31, 2022, and September 30, 2022, respectively | 1,073 | 1,070 |
Preferred stock, $0.01 par value. Authorized 50,000 shares; none issued | ||
Additional paid-in capital | 8,329 | 4,241 |
Accumulated earnings | 490,509 | 440,172 |
Accumulated other comprehensive loss, net of tax | (126,613) | (151,847) |
Total stockholders’ equity | 373,298 | 293,636 |
Total liabilities and stockholders’ equity | $ 2,668,546 | $ 2,576,867 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | Dec. 31, 2022 | Sep. 30, 2022 |
Statement Of Financial Position [Abstract] | ||
Property and equipment, accumulated depreciation (in dollars) | $ 849,202 | $ 820,811 |
Intangible assets, excluding goodwill, accumulated amortization (in dollars) | $ 28,820 | $ 26,794 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, Authorized shares | 500,000,000 | 500,000,000 |
Common stock, shares issued | 107,291,000 | 107,024,000 |
Common stock, shares outstanding | 107,284,000 | 106,970,000 |
Preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Preferred stock, Authorized shares | 50,000,000 | 50,000,000 |
Preferred stock, shares issued | 0 | 0 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Earnings - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Income Statement [Abstract] | ||
Net sales | $ 957,055 | $ 980,251 |
Cost of goods sold | 468,481 | 480,122 |
Gross profit | 488,574 | 500,129 |
Selling, general and administrative expenses | 391,580 | 386,250 |
Restructuring | 10,406 | 1,099 |
Operating earnings | 86,588 | 112,780 |
Interest expense | 17,923 | 20,241 |
Earnings before provision for income taxes | 68,665 | 92,539 |
Provision for income taxes | 18,328 | 23,701 |
Net earnings | $ 50,337 | $ 68,838 |
Earnings per share: | ||
Basic | $ 0.47 | $ 0.61 |
Diluted | $ 0.46 | $ 0.60 |
Weighted-average shares: | ||
Basic | 107,140 | 111,995 |
Diluted | 109,460 | 113,968 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands | 3 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Statement Of Income And Comprehensive Income [Abstract] | ||
Net earnings | $ 50,337 | $ 68,838 |
Other comprehensive income (loss): | ||
Foreign currency translation adjustments | 25,941 | (4,509) |
Interest rate caps, net of tax | 203 | 278 |
Foreign exchange contracts, net of tax | (910) | 480 |
Other comprehensive income (loss), net of tax | 25,234 | (3,751) |
Total comprehensive income | $ 75,571 | $ 65,087 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Stockholders' Equity - USD ($) shares in Thousands, $ in Thousands | Total | Common Stock | Additional Paid-in Capital | Accumulated Earnings | Accumulated Other Comprehensive Loss |
Balance at Sep. 30, 2021 | $ 280,741 | $ 1,129 | $ 17,286 | $ 356,967 | $ (94,641) |
Balance (in shares) at Sep. 30, 2021 | 112,913 | ||||
Increase (Decrease) in Stockholders' Equity | |||||
Net earnings | 68,838 | 68,838 | |||
Other comprehensive income (loss) | (3,751) | (3,751) | |||
Share-based compensation | 3,958 | 3,958 | |||
Stock issued for equity awards | 7,372 | $ 8 | 7,364 | ||
Stock issued for equity awards (in shares) | 795 | ||||
Employee withholding taxes paid related to net share settlement | (1,137) | $ (1) | (1,136) | ||
Employee withholding taxes paid related to net share settlement (in shares) | (56) | ||||
Repurchases and cancellations of common stock | (75,000) | $ (36) | (27,472) | (47,492) | |
Repurchases and cancellations of common stock (in shares) | (3,675) | ||||
Balance at Dec. 31, 2021 | 281,021 | $ 1,100 | 378,313 | (98,392) | |
Balance (in shares) at Dec. 31, 2021 | 109,977 | ||||
Balance at Sep. 30, 2022 | $ 293,636 | $ 1,070 | 4,241 | 440,172 | (151,847) |
Balance (in shares) at Sep. 30, 2022 | 106,970 | 106,970 | |||
Increase (Decrease) in Stockholders' Equity | |||||
Net earnings | $ 50,337 | 50,337 | |||
Other comprehensive income (loss) | 25,234 | 25,234 | |||
Share-based compensation | 5,135 | 5,135 | |||
Stock issued for equity awards | 82 | $ 4 | 78 | ||
Stock issued for equity awards (in shares) | 404 | ||||
Employee withholding taxes paid related to net share settlement | (1,126) | $ (1) | (1,125) | ||
Employee withholding taxes paid related to net share settlement (in shares) | (90) | ||||
Balance at Dec. 31, 2022 | $ 373,298 | $ 1,073 | $ 8,329 | $ 490,509 | $ (126,613) |
Balance (in shares) at Dec. 31, 2022 | 107,284 | 107,284 |
Condensed Consolidated Statem_4
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 3 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Cash Flows from Operating Activities: | ||
Net earnings | $ 50,337 | $ 68,838 |
Adjustments to reconcile net earnings to net cash provided (used) by operating activities: | ||
Depreciation and amortization | 25,285 | 24,421 |
Share-based compensation expense | 5,135 | 3,958 |
Amortization of deferred financing costs | 648 | 932 |
Impairment of long-lived assets, including operating lease assets | 2,103 | |
Loss on disposal of equipment and other property | 77 | 3 |
Deferred income taxes | 889 | 1,867 |
Changes in (exclusive of effects of acquisitions): | ||
Trade accounts receivable | 2,270 | 2,841 |
Accounts receivable, other | (3,817) | (1,724) |
Inventory | (38,019) | (137,326) |
Other current assets | (4,018) | (446) |
Other assets | 4,074 | 1,371 |
Operating leases, net | (10,392) | 6,475 |
Accounts payable and accrued liabilities | 7,606 | 16,729 |
Income taxes payable | 12,460 | 18,166 |
Other liabilities | 313 | (11,790) |
Net cash provided (used) by operating activities | 54,951 | (5,685) |
Cash Flows from Investing Activities: | ||
Payments for property and equipment, net of proceeds | (25,007) | (26,390) |
Acquisitions, net of cash acquired | (319) | |
Net cash used by investing activities | (25,007) | (26,709) |
Cash Flows from Financing Activities: | ||
Proceeds from issuance of long-term debt | 229,000 | |
Repayments of long-term debt, including prepayment costs | (233,927) | (1,421) |
Payments for common stock repurchased | (75,000) | |
Proceeds from equity awards | 60 | 7,372 |
Employee withholding taxes paid related to net share settlement of equity awards | (1,125) | (1,136) |
Net cash used by financing activities | (5,992) | (70,185) |
Effect of foreign exchange rate changes on cash and cash equivalents | 4,561 | (240) |
Net increase (decrease) in cash and cash equivalents | 28,513 | (102,819) |
Cash and cash equivalents, beginning of period | 70,558 | 400,959 |
Cash and cash equivalents, end of period | 99,071 | 298,140 |
Supplemental Cash Flow Information: | ||
Interest paid | 26,758 | 35,034 |
Income taxes paid | 3,081 | 3,978 |
Capital expenditures incurred but not paid | $ 5,542 | $ 3,594 |
Significant Accounting Policies
Significant Accounting Policies | 3 Months Ended |
Dec. 31, 2022 | |
Accounting Policies [Abstract] | |
Significant Accounting Policies | 1. Significant Accounting Policies Basis of Presentation The unaudited condensed consolidated interim financial statements of Sally Beauty Holdings, Inc. and its subsidiaries included herein have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) and pursuant to the rules and regulations of the SEC. Accordingly, certain information and note disclosures normally included in annual financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to the rules and regulations of the SEC, although we believe that the disclosures included herein are adequate for the interim period presented. These condensed consolidated interim financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the fiscal year ended September 30, 2022. In the opinion of management, these unaudited condensed consolidated interim financial statements reflect all adjustments that are of a normal recurring nature and which are necessary to present fairly our consolidated financial position as of December 31, 2022, and September 30, 2022, and our consolidated results of operations, consolidated comprehensive income, consolidated cash flows and consolidated statements of stockholders’ equity for the three months ended December 31, 2022 and 2021. Principles of Consolidation The unaudited condensed consolidated interim financial statements include all accounts of Sally Beauty Holdings, Inc. and its subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation. All amounts are in U.S. Dollars. Accounting Policies We adhere to the same accounting policies in the preparation of our condensed consolidated interim financial statements as we do in the preparation of our full year consolidated financial statements. As permitted under GAAP, interim accounting for certain expenses, including income taxes, is based on full-year assumptions. For interim financial reporting purposes, income taxes are recorded based upon our estimated annual effective income tax. Use of Estimates In order to present our financial statements in conformity with GAAP, we are required to make certain estimates and assumptions that impact our interim financial statements and supplementary disclosures. These estimates may use forecasted financial information based on reasonable information available, however are subject to change in the future. Significant estimates and assumptions are part of our accounting for sales allowances, deferred revenue, valuation of inventory, amortization and depreciation, intangibles and goodwill, and other reserves. We believe these estimates and assumptions are reasonable; however, they are based on management’s current knowledge of events and actions, and changes in facts and circumstances may result in revised estimates and impact actual results. |
Revenue Recognition
Revenue Recognition | 3 Months Ended |
Dec. 31, 2022 | |
Revenue From Contract With Customer [Abstract] | |
Revenue Recognition | 2. Revenue Recognition Substantially all of our revenue is derived through the sale of merchandise at the point-of-sale. Revenue is recognized net of estimated sales returns and sales taxes. We estimate sales returns based on historical data. Changes to our contract liabilities, which are included in accrued liabilities in our condensed consolidated balance sheets, for the periods were as follows (in thousands): Three Months Ended December 31, 2022 2021 Beginning Balance $ 13,460 $ 16,744 Loyalty points and gift cards issued but not redeemed, net of estimated breakage 6,291 5,842 Revenue recognized from beginning liability (4,489 ) (3,509 ) Ending Balance $ 15,262 $ 19,077 See Note 10, Segment Reporting |
Fair Value Measurements
Fair Value Measurements | 3 Months Ended |
Dec. 31, 2022 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | 3. Fair Value Measurements We measure on a recurring basis and disclose the fair value of our financial instruments under the provisions of ASC Topic 820, Fair Value Measurement, as amended (“ASC 820”). We define “fair value” as the price that would be received to sell an asset or paid to transfer a liability (i.e., the exit price) in an orderly transaction between market participants at the measurement date. ASC 820 establishes a three-level hierarchy for measuring fair value and requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. This valuation hierarchy is based upon the transparency of inputs to the valuation of an asset or liability on the measurement date. The three levels of that hierarchy are defined as follows: Level 1 - Quoted prices are available in active markets for identical assets or liabilities; Level 2 - Pricing inputs are other than quoted prices in active markets, included in Level 1, that are either directly or indirectly observable; and Level 3 - Unobservable pricing inputs in which little or no market activity exists, therefore requiring an entity to develop its own model with estimates and assumptions. Financial instruments measured at fair value on recurring basis Consistent with the fair value hierarchy, we categorized our financial assets and liabilities as follow: (in thousands) Classification Fair Value Hierarchy Level December 31, 2022 September 30, 2022 Financial Assets: Foreign exchange contracts Non-designated cash flow hedges Other current assets Level 2 $ 4,463 $ 294 Interest rate caps Other current assets Level 2 3,627 3,860 Total assets $ 8,090 $ 4,154 . Financial Liabilities: Foreign exchange contracts Designated cash flow hedges Accrued liabilities Level 2 $ 1,930 $ — Non-designated cash flow hedges Accrued liabilities Level 2 4,045 79 Total liabilities $ 5,975 $ 79 The fair value for interest rate caps and foreign exchange contracts were measured using widely accepted valuation techniques, such as discounted cash flow analyses and observable inputs, such as market interest rates and foreign exchange rates. Other fair value disclosures The carrying amounts of cash equivalents, trade and other accounts receivable and accounts payable and borrowing under our ABL facility approximate their respective fair values due to the short-term nature of these financial instruments. Carrying amounts and the related estimated fair value of our long-term debt, excluding capital lease obligations and debt issuance costs, are as follows: December 31, 2022 September 30, 2022 (in thousands) Fair Value Hierarchy Level Carrying Value Fair Value Carrying Value Fair Value Long-term debt, excluding capital leases Senior notes Level 1 $ 679,961 $ 652,763 $ 679,961 $ 639,163 Term loan B Level 2 406,125 403,587 407,500 398,331 Total long-term debt $ 1,086,086 $ 1,056,350 $ 1,087,461 $ 1,037,494 The fair value of term loan B was measured using quoted market prices for similar debt securities in active markets or widely accepted valuation techniques, such as discounted cash flow analyses, using observable inputs, such as market interest rates. |
Stockholders' Equity
Stockholders' Equity | 3 Months Ended |
Dec. 31, 2022 | |
Stockholders Equity Note [Abstract] | |
Stockholders' Equity | 4. Stockholders’ Equity Share Repurchases In August 2017, our Board of Directors (“Board”) approved a share repurchase program authorizing us to repurchase up to $1.0 billion of its common stock, subject to certain limitations governed by our debt agreements. In July 2021, our Board approved a term extension of the share repurchase program for the four-year Accumulated Other Comprehensive Income (Loss) The change in accumulated other comprehensive loss (“AOCL”) was as follows (in thousands): Foreign Currency Translation Adjustments Interest Rate Caps Foreign Exchange Contracts Total Balance at September 30, 2022 $ (153,128 ) $ 1,960 $ (679 ) $ (151,847 ) Other comprehensive income (loss) before reclassification, net of tax 25,941 155 (608 ) 25,488 Reclassification to net earnings, net of tax — 48 (302 ) (254 ) Balance at December 31, 2022 $ (127,187 ) $ 2,163 $ (1,589 ) $ (126,613 ) The tax impact for the changes in other comprehensive loss and the reclassifications to net earnings was not material. |
Weighted-Average Shares
Weighted-Average Shares | 3 Months Ended |
Dec. 31, 2022 | |
Earnings Per Share [Abstract] | |
Weighted-Average Shares | 5. Weighted-Average Shares The following table sets forth the reconciliation of basic and diluted weighted-average shares (in thousands): Three Months Ended December 31, 2022 2021 Weighted-average basic shares 107,140 111,995 Dilutive securities: Stock option and stock award programs 2,320 1,973 Weighted-average diluted shares 109,460 113,968 Anti-dilutive options excluded from our computation of diluted shares 2,123 2,775 |
Goodwill and Intangible Assets
Goodwill and Intangible Assets | 3 Months Ended |
Dec. 31, 2022 | |
Goodwill And Intangible Assets Disclosure [Abstract] | |
Goodwill and Intangible Assets | 6. Goodwill and Intangible Assets W e considered potential triggering events and determined there were none for the three months ended December 31, 2022. Three Months Ended December 31, (in thousands) 2022 2021 Intangible assets amortization expense $ 1,008 $ 1,071 Additionally, during the three months ended December 31, 2022, the changes in goodwill and other intangibles were primarily from the effects of foreign currency exchange rates of $6.4 million and $1.7 million, respectively. During the three months ended December 31, 2021, the changes in goodwill were primarily from the effects of foreign currency exchange rates of $0.9 million. |
Accrued Liabilities
Accrued Liabilities | 3 Months Ended |
Dec. 31, 2022 | |
Payables And Accruals [Abstract] | |
Accrued Liabilities | 7. Accrued Liabilities Accrued liabilities consist of the following (in thousands): December 31, 2022 September 30, 2022 Compensation and benefits $ 46,027 $ 58,693 Deferred revenue 20,384 18,810 Rental obligations 14,353 10,701 Insurance reserves 6,104 5,742 Property and other taxes 4,266 4,161 Interest payable 3,865 13,445 Operating accruals and other 47,786 49,513 Total accrued liabilities $ 142,785 $ 161,065 |
Short-term Borrowings and Long-
Short-term Borrowings and Long-term Debt | 3 Months Ended |
Dec. 31, 2022 | |
Debt Disclosure [Abstract] | |
Short-term Borrowings and Long-term Debt | 8. Short-term Borrowings and Long-term Debt At December 31, 2022, our ABL facility had $65.0 million in outstanding borrowings |
Derivative Instruments and Hedg
Derivative Instruments and Hedging Activities | 3 Months Ended |
Dec. 31, 2022 | |
Derivative Instruments And Hedging Activities Disclosure [Abstract] | |
Derivative Instruments and Hedging Activities | 9. Derivative Instruments and Hedging Activities During the three months ended December 31, 2022, we did not purchase or hold any derivative instruments for trading or speculative purposes. See Note 3, Fair Value Measurements Designated Cash Flow Hedges Foreign Currency Forwards We regularly enter into foreign currency forwards to mitigate our exposure to exchange rate changes on forecasted inventory purchases in U.S. dollars by our foreign subsidiaries. At December 31, 2022, we held forwards, which expire ratably through September 30, 2023, with a notional amount, based upon exchange rates at December 31, 2022, as follows (in thousands): Notional Currency Notional Amount Mexican Peso $ 17,629 Euro 11,549 Canadian Dollar 8,921 Total $ 38,099 Quarterly, the changes in fair value related to these foreign currency forwards are recorded into AOCL. As the forwards are exercised, the realized value is recognized into cost of goods sold, based on inventory turns, in our condensed consolidated statements of earnings. For the three months ended December 31, 2022 and 2021, we recognized a gain of $0.3 million and a loss of $0.3 million, respectively. Based on December 31, 2022, valuations and exchange rates, we expect to reclassify losses of approximately $1.6 million into cost of goods sold over the next 12 months. Interest Rate Caps In July 2017, we purchased two interest rate caps with an initial aggregate notional amount of $550 million (the “interest rate caps”) to mitigate the exposure to higher interest rates in connection with our term loan B. The interest rate caps are comprised of individual caplets that expire ratably through June 30, 2023, and are designated as cash flow hedges. Accordingly, changes in fair value of the interest rate caps are recorded quarterly, net of income tax, and are included in AOCL. For the three months ended December 31, 2022 and 2021, we recognized expense of $0.1 million and $0.4 million, respectively, into interest expense on our condensed consolidated statements of earnings. Over the next 12 months, we expect to reclassify gains of approximately $ 2.6 million into interest expense, which represents estimated interest rate settlements less the original value of the expiring caplets. Non-Designated Derivative Instruments We also use foreign exchange contracts to mitigate our exposure to exchange rate changes in connection with certain intercompany balances not permanently invested. At December 31, 2022, we held forwards, which expire on various dates in the first month of both the second and third fiscal quarters of fiscal year 2023, with a notional amount, based upon exchange rates at December 31, 2022, as follows (in thousands): Notional Currency Notional Amount British Pound $ 87,321 Canadian Dollar 56,329 Euro 56,269 Mexican Peso 23,865 Total $ 223,784 We record changes in fair value and realized gains or losses related to these foreign currency forwards into selling, general and administrative expenses. For the three months ended December 31, 2022 and 2021, the effects of these foreign exchange contracts on our condensed consolidated financial statements were gains of $0.4 |
Business Segments
Business Segments | 3 Months Ended |
Dec. 31, 2022 | |
Segment Reporting [Abstract] | |
Segment Reporting | 10. Segment Reporting Segment data for the three months ended December 31, 2022 and 2021, is as follows (in thousands): Three Months Ended December 31, 2022 2021 Net sales: Sally Beauty Supply ("SBS") $ 549,472 $ 561,530 Beauty Systems Group ("BSG") 407,583 418,721 Total $ 957,055 $ 980,251 Earnings before provision for income taxes: Segment operating earnings: SBS $ 99,174 $ 100,623 BSG 49,647 58,546 Segment operating earnings 148,821 159,169 Unallocated expenses 51,827 45,290 Restructuring 10,406 1,099 Consolidated operating earnings 86,588 112,780 Interest expense 17,923 20,241 Earnings before provision for income taxes $ 68,665 $ 92,539 Sales between segments, which are eliminated in consolidation, were not material during the three months ended December 31, 2022 and 2021. Disaggregation of net sales by segment The following tables disaggregate our segment revenues by merchandise category. We have reclassified certain prior year amounts within BSG to conform to current year presentation. Three Months Ended December 31, SBS 2022 2021 Hair color 38.7 % 36.8 % Hair care 23.4 % 23.8 % Styling tools and supplies 19.5 % 20.2 % Nail 10.3 % 10.4 % Skin and cosmetics 7.4 % 7.9 % Other beauty items 0.7 % 0.9 % Total 100.0 % 100.0 % Three Months Ended December 31, BSG 2022 2021 Hair care 43.5 % 43.5 % Hair color 38.3 % 38.4 % Styling tools and supplies 10.8 % 11.4 % Skin and cosmetics 4.4 % 4.4 % Nail 2.7 % 2.0 % Other beauty items 0.3 % 0.3 % Total 100.0 % 100.0 % The following tables disaggregate our segment revenue by sales channels: Three Months Ended December 31, SBS 2022 2021 Company-operated stores 93.6 % 94.2 % E-commerce 6.4 % 5.8 % Total 100.0 % 100.0 % Three Months Ended December 31, BSG 2022 2021 Company-operated stores 66.3 % 67.5 % E-commerce 13.6 % 11.7 % Distributor sales consultants 12.6 % 13.6 % Franchise stores 7.5 % 7.2 % Total 100.0 % 100.0 % |
Restructuring
Restructuring | 3 Months Ended |
Dec. 31, 2022 | |
Restructuring And Related Activities [Abstract] | |
Restructuring | 11. Restructuring Restructuring expenses, included in Cost of Goods Sold (“COGS”) and Restructuring for the three months ended December 31, 2022 and 2021 are as follows (in thousands): Three Months Ended December 31, 2022 2021 Included in COGS Distribution Center Consolidation and Store Optimization Plan $ (2,680 ) (a) $ — Included in Restructuring Distribution Center Consolidation and Store Optimization Plan $ 10,406 (b) $ — Transformation Plan — 1,099 Total in Restructuring 10,406 1,099 Total Restructuring Expenses $ 7,726 $ 1,099 (a) Amounts included within COGS are related to adjustments to our expected obsolescence reserve related to the Plan (as defined below). (b) Amounts included within Restructuring (SG&A) are related to stores and distribution centers closed during the quarter in accordance with the Plan (as defined below). Distribution Center Consolidation and Store Optimization Plan In the fourth quarter of fiscal year 2022, our Board approved the Distribution Center Consolidation and Store Optimization Plan authorizing the closure of 330 SBS stores and 35 BSG stores, and the closure of two BSG distribution centers in Clackamas, Oregon and Pottsville, Pennsylvania (“the Plan”). During the three months ended December 31, 2022, we completed the closure of the two BSG distributions centers. We believe that consolidating the operation of these two distribution centers into our larger distribution centers will increase product availability, shorten delivery times and reduce overall costs. As of December 31, 2022, we have closed 327 SBS stores and 14 BSG stores as part of the Plan. Stores identified for early closure were part of a strategic evaluation which included a market analysis of certain locations where we believe we will be able to recapture demand at other nearby store locations and improve overall profitability. By optimizing our store base, we are further focusing on our customers’ shopping experience and our product offerings. The Plan will continue to be executed throughout fiscal year 2023 and into the first half of fiscal year 2024, and therefore it may include future charges related to store closures such as exit costs, lease negotiation penalties, termination benefits and adjustments to estimates. The liability related to the Plan, which is included in accrued liabilities on our consolidated balance sheets, is as follows: (in thousands) Liability at September 30, 2022 SBS Expense BSG Expense Cash Payments Non-Cash Amounts Liability at December 31, 2022 Closing costs - leases (a) $ — $ 4,738 $ 132 $ — $ (868 ) $ 4,002 Closing costs - payroll expenses (b) — 988 961 — — 1,949 Impairment - property and equipment (c) — 1,069 610 — (1,679 ) — Inventory transfer costs — 1,128 204 (294 ) — 1,038 Impairment - operating lease assets (c) — 345 83 — (428 ) — Other 1,291 102 46 (1,351 ) — 88 Total $ 1,291 $ 8,370 $ 2,036 $ (1,645 ) $ (2,975 ) $ 7,077 (a) Lease-related closing costs include contract terminations costs as well as other rental obligations associated with closing stores. (b) Payroll-related closing costs include one-time termination benefits related to the closure of our distribution centers as well as other payroll expenses associated with closing stores. (c) Remaining carrying value for the long-lived assets, including operating lease assets, were not material and approximate their fair value. |
Significant Accounting Polici_2
Significant Accounting Policies (Policies) | 3 Months Ended |
Dec. 31, 2022 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation The unaudited condensed consolidated interim financial statements of Sally Beauty Holdings, Inc. and its subsidiaries included herein have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) and pursuant to the rules and regulations of the SEC. Accordingly, certain information and note disclosures normally included in annual financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to the rules and regulations of the SEC, although we believe that the disclosures included herein are adequate for the interim period presented. These condensed consolidated interim financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the fiscal year ended September 30, 2022. In the opinion of management, these unaudited condensed consolidated interim financial statements reflect all adjustments that are of a normal recurring nature and which are necessary to present fairly our consolidated financial position as of December 31, 2022, and September 30, 2022, and our consolidated results of operations, consolidated comprehensive income, consolidated cash flows and consolidated statements of stockholders’ equity for the three months ended December 31, 2022 and 2021. |
Principles of Consolidation | Principles of Consolidation The unaudited condensed consolidated interim financial statements include all accounts of Sally Beauty Holdings, Inc. and its subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation. All amounts are in U.S. Dollars. |
Accounting Policies | Accounting Policies We adhere to the same accounting policies in the preparation of our condensed consolidated interim financial statements as we do in the preparation of our full year consolidated financial statements. As permitted under GAAP, interim accounting for certain expenses, including income taxes, is based on full-year assumptions. For interim financial reporting purposes, income taxes are recorded based upon our estimated annual effective income tax. |
Use of Estimates | Use of Estimates In order to present our financial statements in conformity with GAAP, we are required to make certain estimates and assumptions that impact our interim financial statements and supplementary disclosures. These estimates may use forecasted financial information based on reasonable information available, however are subject to change in the future. Significant estimates and assumptions are part of our accounting for sales allowances, deferred revenue, valuation of inventory, amortization and depreciation, intangibles and goodwill, and other reserves. We believe these estimates and assumptions are reasonable; however, they are based on management’s current knowledge of events and actions, and changes in facts and circumstances may result in revised estimates and impact actual results. |
Revenue Recognition (Tables)
Revenue Recognition (Tables) | 3 Months Ended |
Dec. 31, 2022 | |
Revenue From Contract With Customer [Abstract] | |
Schedule of Changes to Contract Liabilities | Changes to our contract liabilities, which are included in accrued liabilities in our condensed consolidated balance sheets, for the periods were as follows (in thousands): Three Months Ended December 31, 2022 2021 Beginning Balance $ 13,460 $ 16,744 Loyalty points and gift cards issued but not redeemed, net of estimated breakage 6,291 5,842 Revenue recognized from beginning liability (4,489 ) (3,509 ) Ending Balance $ 15,262 $ 19,077 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 3 Months Ended |
Dec. 31, 2022 | |
Fair Value Disclosures [Abstract] | |
Schedule of financial assets and liabilities and other fair value disclosures by fair value hierarchy | Financial instruments measured at fair value on recurring basis Consistent with the fair value hierarchy, we categorized our financial assets and liabilities as follow: (in thousands) Classification Fair Value Hierarchy Level December 31, 2022 September 30, 2022 Financial Assets: Foreign exchange contracts Non-designated cash flow hedges Other current assets Level 2 $ 4,463 $ 294 Interest rate caps Other current assets Level 2 3,627 3,860 Total assets $ 8,090 $ 4,154 . Financial Liabilities: Foreign exchange contracts Designated cash flow hedges Accrued liabilities Level 2 $ 1,930 $ — Non-designated cash flow hedges Accrued liabilities Level 2 4,045 79 Total liabilities $ 5,975 $ 79 Other fair value disclosures The carrying amounts of cash equivalents, trade and other accounts receivable and accounts payable and borrowing under our ABL facility approximate their respective fair values due to the short-term nature of these financial instruments. Carrying amounts and the related estimated fair value of our long-term debt, excluding capital lease obligations and debt issuance costs, are as follows: December 31, 2022 September 30, 2022 (in thousands) Fair Value Hierarchy Level Carrying Value Fair Value Carrying Value Fair Value Long-term debt, excluding capital leases Senior notes Level 1 $ 679,961 $ 652,763 $ 679,961 $ 639,163 Term loan B Level 2 406,125 403,587 407,500 398,331 Total long-term debt $ 1,086,086 $ 1,056,350 $ 1,087,461 $ 1,037,494 |
Stockholders' Equity (Tables)
Stockholders' Equity (Tables) | 3 Months Ended |
Dec. 31, 2022 | |
Stockholders Equity Note [Abstract] | |
Schedule of changes in accumulated other comprehensive loss | The change in accumulated other comprehensive loss (“AOCL”) was as follows (in thousands): Foreign Currency Translation Adjustments Interest Rate Caps Foreign Exchange Contracts Total Balance at September 30, 2022 $ (153,128 ) $ 1,960 $ (679 ) $ (151,847 ) Other comprehensive income (loss) before reclassification, net of tax 25,941 155 (608 ) 25,488 Reclassification to net earnings, net of tax — 48 (302 ) (254 ) Balance at December 31, 2022 $ (127,187 ) $ 2,163 $ (1,589 ) $ (126,613 ) |
Weighted-Average Shares (Tables
Weighted-Average Shares (Tables) | 3 Months Ended |
Dec. 31, 2022 | |
Earnings Per Share [Abstract] | |
Schedule of reconciliation of basic and diluted weighted-average shares | The following table sets forth the reconciliation of basic and diluted weighted-average shares (in thousands): Three Months Ended December 31, 2022 2021 Weighted-average basic shares 107,140 111,995 Dilutive securities: Stock option and stock award programs 2,320 1,973 Weighted-average diluted shares 109,460 113,968 Anti-dilutive options excluded from our computation of diluted shares 2,123 2,775 |
Goodwill and Intangible Assets
Goodwill and Intangible Assets (Tables) | 3 Months Ended |
Dec. 31, 2022 | |
Goodwill And Intangible Assets Disclosure [Abstract] | |
Summary of Intangible Assets Amortization Expense | Three Months Ended December 31, (in thousands) 2022 2021 Intangible assets amortization expense $ 1,008 $ 1,071 |
Accrued Liabilities (Tables)
Accrued Liabilities (Tables) | 3 Months Ended |
Dec. 31, 2022 | |
Payables And Accruals [Abstract] | |
Schedule of accrued liabilities | Accrued liabilities consist of the following (in thousands): December 31, 2022 September 30, 2022 Compensation and benefits $ 46,027 $ 58,693 Deferred revenue 20,384 18,810 Rental obligations 14,353 10,701 Insurance reserves 6,104 5,742 Property and other taxes 4,266 4,161 Interest payable 3,865 13,445 Operating accruals and other 47,786 49,513 Total accrued liabilities $ 142,785 $ 161,065 |
Derivative Instruments and He_2
Derivative Instruments and Hedging Activities (Tables) - Foreign Exchange Contract | 3 Months Ended |
Dec. 31, 2022 | |
Schedule of notional amount held through foreign currency forwards, based upon exchange rates | At December 31, 2022, we held forwards, which expire ratably through September 30, 2023, with a notional amount, based upon exchange rates at December 31, 2022, as follows (in thousands): Notional Currency Notional Amount Mexican Peso $ 17,629 Euro 11,549 Canadian Dollar 8,921 Total $ 38,099 |
Non-Designated Derivative Instruments | |
Schedule of notional amount held through foreign currency forwards, based upon exchange rates | At December 31, 2022, we held forwards, which expire on various dates in the first month of both the second and third fiscal quarters of fiscal year 2023, with a notional amount, based upon exchange rates at December 31, 2022, as follows (in thousands): Notional Currency Notional Amount British Pound $ 87,321 Canadian Dollar 56,329 Euro 56,269 Mexican Peso 23,865 Total $ 223,784 |
Segment Reporting (Tables)
Segment Reporting (Tables) | 3 Months Ended |
Dec. 31, 2022 | |
Segment Reporting [Abstract] | |
Schedule of segment data | Segment data for the three months ended December 31, 2022 and 2021, is as follows (in thousands): Three Months Ended December 31, 2022 2021 Net sales: Sally Beauty Supply ("SBS") $ 549,472 $ 561,530 Beauty Systems Group ("BSG") 407,583 418,721 Total $ 957,055 $ 980,251 Earnings before provision for income taxes: Segment operating earnings: SBS $ 99,174 $ 100,623 BSG 49,647 58,546 Segment operating earnings 148,821 159,169 Unallocated expenses 51,827 45,290 Restructuring 10,406 1,099 Consolidated operating earnings 86,588 112,780 Interest expense 17,923 20,241 Earnings before provision for income taxes $ 68,665 $ 92,539 |
Schedule of disaggregation of net sales by segment | Disaggregation of net sales by segment The following tables disaggregate our segment revenues by merchandise category. We have reclassified certain prior year amounts within BSG to conform to current year presentation. Three Months Ended December 31, SBS 2022 2021 Hair color 38.7 % 36.8 % Hair care 23.4 % 23.8 % Styling tools and supplies 19.5 % 20.2 % Nail 10.3 % 10.4 % Skin and cosmetics 7.4 % 7.9 % Other beauty items 0.7 % 0.9 % Total 100.0 % 100.0 % Three Months Ended December 31, BSG 2022 2021 Hair care 43.5 % 43.5 % Hair color 38.3 % 38.4 % Styling tools and supplies 10.8 % 11.4 % Skin and cosmetics 4.4 % 4.4 % Nail 2.7 % 2.0 % Other beauty items 0.3 % 0.3 % Total 100.0 % 100.0 % The following tables disaggregate our segment revenue by sales channels: Three Months Ended December 31, SBS 2022 2021 Company-operated stores 93.6 % 94.2 % E-commerce 6.4 % 5.8 % Total 100.0 % 100.0 % Three Months Ended December 31, BSG 2022 2021 Company-operated stores 66.3 % 67.5 % E-commerce 13.6 % 11.7 % Distributor sales consultants 12.6 % 13.6 % Franchise stores 7.5 % 7.2 % Total 100.0 % 100.0 % |
Restructuring (Tables)
Restructuring (Tables) | 3 Months Ended |
Dec. 31, 2022 | |
Restructuring And Related Activities [Abstract] | |
Summary of restructuring expense and gains | Restructuring expenses, included in Cost of Goods Sold (“COGS”) and Restructuring for the three months ended December 31, 2022 and 2021 are as follows (in thousands): Three Months Ended December 31, 2022 2021 Included in COGS Distribution Center Consolidation and Store Optimization Plan $ (2,680 ) (a) $ — Included in Restructuring Distribution Center Consolidation and Store Optimization Plan $ 10,406 (b) $ — Transformation Plan — 1,099 Total in Restructuring 10,406 1,099 Total Restructuring Expenses $ 7,726 $ 1,099 (a) Amounts included within COGS are related to adjustments to our expected obsolescence reserve related to the Plan (as defined below). (b) Amounts included within Restructuring (SG&A) are related to stores and distribution centers closed during the quarter in accordance with the Plan (as defined below). |
Schedule of restructuring | The liability related to the Plan, which is included in accrued liabilities on our consolidated balance sheets, is as follows: (in thousands) Liability at September 30, 2022 SBS Expense BSG Expense Cash Payments Non-Cash Amounts Liability at December 31, 2022 Closing costs - leases (a) $ — $ 4,738 $ 132 $ — $ (868 ) $ 4,002 Closing costs - payroll expenses (b) — 988 961 — — 1,949 Impairment - property and equipment (c) — 1,069 610 — (1,679 ) — Inventory transfer costs — 1,128 204 (294 ) — 1,038 Impairment - operating lease assets (c) — 345 83 — (428 ) — Other 1,291 102 46 (1,351 ) — 88 Total $ 1,291 $ 8,370 $ 2,036 $ (1,645 ) $ (2,975 ) $ 7,077 (a) Lease-related closing costs include contract terminations costs as well as other rental obligations associated with closing stores. (b) Payroll-related closing costs include one-time termination benefits related to the closure of our distribution centers as well as other payroll expenses associated with closing stores. (c) Remaining carrying value for the long-lived assets, including operating lease assets, were not material and approximate their fair value. |
Revenue Recognition - Schedule
Revenue Recognition - Schedule of Changes to Contract Liabilities (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Contract With Customer Liability [Abstract] | ||
Beginning Balance | $ 13,460 | $ 16,744 |
Loyalty points and gift cards issued but not redeemed, net of estimated breakage | 6,291 | 5,842 |
Revenue recognized from beginning liability | (4,489) | (3,509) |
Ending Balance | $ 15,262 | $ 19,077 |
Fair Value Measurements (Detail
Fair Value Measurements (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Sep. 30, 2022 |
Long-term debt, excluding capital leases | ||
Long-term debt, excluding capital leases, Carrying Value | $ 1,086,086 | $ 1,087,461 |
Long-term debt, excluding capital leases, Fair Value | 1,056,350 | 1,037,494 |
Level 2 | Term loan B | ||
Long-term debt, excluding capital leases | ||
Long-term debt, excluding capital leases, Carrying Value | 406,125 | 407,500 |
Long-term debt, excluding capital leases, Fair Value | 403,587 | 398,331 |
Level 1 | Senior notes | ||
Long-term debt, excluding capital leases | ||
Long-term debt, excluding capital leases, Carrying Value | 679,961 | 679,961 |
Long-term debt, excluding capital leases, Fair Value | 652,763 | 639,163 |
Fair Value, Recurring | ||
Financial Assets: | ||
Total assets | 8,090 | 4,154 |
Financial Liabilities: | ||
Total liabilities | 5,975 | 79 |
Fair Value, Recurring | Level 2 | Other current assets | ||
Financial Assets: | ||
Interest rate caps | 3,627 | 3,860 |
Fair Value, Recurring | Level 2 | Other current assets | Non-Designated Derivative Instruments | ||
Financial Assets: | ||
Cash flow hedges | 4,463 | 294 |
Fair Value, Recurring | Level 2 | Accrued Liabilities | Non-Designated Derivative Instruments | ||
Financial Liabilities: | ||
Cash flow hedges | 4,045 | $ 79 |
Fair Value, Recurring | Level 2 | Accrued Liabilities | Designated cash flow hedges | ||
Financial Liabilities: | ||
Cash flow hedges | $ 1,930 |
Stockholders' Equity - Share Re
Stockholders' Equity - Share Repurchase Program (Details) - 2017 Share Repurchase program - USD ($) | 1 Months Ended | 3 Months Ended | ||
Jul. 31, 2021 | Dec. 31, 2022 | Dec. 31, 2021 | Aug. 31, 2017 | |
Share Repurchase Program | ||||
Amount of shares authorized to be repurchased | $ 595,800,000 | $ 1,000,000,000 | ||
Term of share repurchase program, extended | 4 years | |||
Stock repurchase program, expiration date | Sep. 30, 2025 | |||
Number of shares repurchased | 0 | 3,700,000 | ||
Total cost of share repurchased | $ 75,000,000 |
Stockholders' Equity - Change i
Stockholders' Equity - Change in AOCL (Details) $ in Thousands | 3 Months Ended |
Dec. 31, 2022 USD ($) | |
Accumulated Other Comprehensive Income Loss [Line Items] | |
Balance | $ 293,636 |
Balance | 373,298 |
Interest rate caps | |
Accumulated Other Comprehensive Income Loss [Line Items] | |
Balance | 1,960 |
Other comprehensive income (loss) before reclassification, net of tax | 155 |
Reclassification to net earnings, net of tax | 48 |
Balance | 2,163 |
Foreign exchange contracts | |
Accumulated Other Comprehensive Income Loss [Line Items] | |
Balance | (679) |
Other comprehensive income (loss) before reclassification, net of tax | (608) |
Reclassification to net earnings, net of tax | (302) |
Balance | (1,589) |
Foreign currency translation adjustments | |
Accumulated Other Comprehensive Income Loss [Line Items] | |
Balance | (153,128) |
Other comprehensive income (loss) before reclassification, net of tax | 25,941 |
Balance | (127,187) |
Accumulated Other Comprehensive Loss | |
Accumulated Other Comprehensive Income Loss [Line Items] | |
Balance | (151,847) |
Other comprehensive income (loss) before reclassification, net of tax | 25,488 |
Reclassification to net earnings, net of tax | (254) |
Balance | $ (126,613) |
Weighted-Average Shares (Detail
Weighted-Average Shares (Details) - shares shares in Thousands | 3 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Earnings Per Share Reconciliation: | ||
Weighted-average basic shares | 107,140 | 111,995 |
Dilutive securities: | ||
Stock option and stock award programs | 2,320 | 1,973 |
Weighted-average diluted shares | 109,460 | 113,968 |
Anti-dilutive options excluded from our computation of diluted shares | 2,123 | 2,775 |
Goodwill and Intangible Asset_2
Goodwill and Intangible Assets - (Details) - USD ($) | 3 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Goodwill And Intangible Assets Disclosure [Abstract] | ||
Impairment losses in connection with the goodwill | $ 0 | $ 0 |
Impairment losses in connection with the intangible assets | 0 | 0 |
Goodwill, decreased from effects of foreign currency exchange rates | 6,400,000 | $ 900,000 |
Intangible assets, decreased from effects of foreign currency exchange rates | $ 1,700,000 |
Goodwill and Intangible Asset_3
Goodwill and Intangible Assets - Summary of Intangible Assets Amortization Expense (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Goodwill And Intangible Assets Disclosure [Abstract] | ||
Intangible assets amortization expense | $ 1,008 | $ 1,071 |
Accrued Liabilities (Details)
Accrued Liabilities (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Sep. 30, 2022 |
Accrued Liabilities | ||
Compensation and benefits | $ 46,027 | $ 58,693 |
Deferred revenue | 20,384 | 18,810 |
Rental obligations | 14,353 | 10,701 |
Insurance reserves | 6,104 | 5,742 |
Property and other taxes | 4,266 | 4,161 |
Interest payable | 3,865 | 13,445 |
Operating accruals and other | 47,786 | 49,513 |
Total accrued liabilities | $ 142,785 | $ 161,065 |
Short-term Borrowings and Lon_2
Short-term Borrowings and Long-term Debt - Additional Information (Details) - ABL facility | Dec. 31, 2022 USD ($) |
Debt Instrument [Line Items] | |
Outstanding borrowing | $ 65,000,000 |
Revolving credit facility | $ 417,700,000 |
Derivative Instruments and He_3
Derivative Instruments and Hedging Activities - (Details) | 3 Months Ended | ||
Dec. 31, 2022 USD ($) instrument | Dec. 31, 2021 USD ($) | Jul. 31, 2017 USD ($) derivative | |
Derivative Instruments | |||
Number of derivative instruments held | instrument | 0 | ||
Interest expense | $ 17,923,000 | $ 20,241,000 | |
Foreign Currency Forwards | |||
Derivative Instruments | |||
Derivative instruments, expiration date | Sep. 30, 2023 | ||
Foreign Currency Forwards | Selling, General and Administrative Expenses | |||
Derivative Instruments | |||
Foreign currency forwards designated as cash flow hedges to be reclassified gain (loss) | $ 400,000 | 400,000 | |
Foreign Currency Forwards | Reclassification out of Accumulated Other Comprehensive Income | |||
Derivative Instruments | |||
Foreign currency forwards designated as cash flow hedges to be reclassified gain (loss) | 300,000 | (300,000) | |
Foreign currency forwards designated as cash flow hedges to be reclassified losses into cost of goods sold over next 12 months | $ (1,600,000) | ||
Interest rate caps | Variable-rate tranche | Sally Holdings, LLC | |||
Derivative Instruments | |||
Derivative instruments, expiration date | Jun. 30, 2023 | ||
Notional Amount | $ 550,000,000 | ||
Number of interest rate caps | derivative | 2 | ||
Interest expense | $ 100,000 | $ 400,000 | |
Interest rate caps | Term loan B variable tranche | Sally Holdings, LLC | |||
Derivative Instruments | |||
Interest rate caps designated as cash flow hedges to be reclassified into interest expense over next 12 months | $ 2,600,000 |
Derivative Instruments and He_4
Derivative Instruments and Hedging Activities - Schedule of Notional Amount Held Through Foreign Currency Forwards, Based Upon Exchange Rates (Details) $ in Thousands | Dec. 31, 2022 USD ($) |
Foreign Currency Forwards | Designated cash flow hedges | |
Foreign Currency Fair Value Hedge Derivative [Line Items] | |
Notional Amount | $ 38,099 |
Foreign Currency Forwards | Non-Designated Derivative Instruments | |
Foreign Currency Fair Value Hedge Derivative [Line Items] | |
Notional Amount | 223,784 |
Mexican Peso | Designated cash flow hedges | |
Foreign Currency Fair Value Hedge Derivative [Line Items] | |
Notional Amount | 17,629 |
Mexican Peso | Non-Designated Derivative Instruments | |
Foreign Currency Fair Value Hedge Derivative [Line Items] | |
Notional Amount | 23,865 |
Euro | Designated cash flow hedges | |
Foreign Currency Fair Value Hedge Derivative [Line Items] | |
Notional Amount | 11,549 |
Euro | Non-Designated Derivative Instruments | |
Foreign Currency Fair Value Hedge Derivative [Line Items] | |
Notional Amount | 56,269 |
Canadian Dollar | Designated cash flow hedges | |
Foreign Currency Fair Value Hedge Derivative [Line Items] | |
Notional Amount | 8,921 |
Canadian Dollar | Non-Designated Derivative Instruments | |
Foreign Currency Fair Value Hedge Derivative [Line Items] | |
Notional Amount | 56,329 |
British Pound | Non-Designated Derivative Instruments | |
Foreign Currency Fair Value Hedge Derivative [Line Items] | |
Notional Amount | $ 87,321 |
Segment Reporting (Details)
Segment Reporting (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Net sales: | ||
Total net sales | $ 957,055 | $ 980,251 |
Segment operating earnings: | ||
Segment operating earnings | 86,588 | 112,780 |
Restructuring | 10,406 | 1,099 |
Interest expense | 17,923 | 20,241 |
Earnings before provision for income taxes | 68,665 | 92,539 |
Operating segments | ||
Segment operating earnings: | ||
Segment operating earnings | 148,821 | 159,169 |
Corporate | ||
Segment operating earnings: | ||
Unallocated expenses | 51,827 | 45,290 |
Sally Beauty Supply | ||
Net sales: | ||
Total net sales | 549,472 | 561,530 |
Sally Beauty Supply | Operating segments | ||
Segment operating earnings: | ||
Segment operating earnings | 99,174 | 100,623 |
Beauty Systems Group | ||
Net sales: | ||
Total net sales | 407,583 | 418,721 |
Beauty Systems Group | Operating segments | ||
Segment operating earnings: | ||
Segment operating earnings | $ 49,647 | $ 58,546 |
Segment Reporting - Schedule of
Segment Reporting - Schedule of Disaggregation of Net Sales by Segment (Details) - Sales Revenue, Net - Product Concentration Risk | 3 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Sally Beauty Supply | ||
Disaggregation Of Revenue [Line Items] | ||
Percentage of net sales | 100% | 100% |
Sally Beauty Supply | Hair color | ||
Disaggregation Of Revenue [Line Items] | ||
Percentage of net sales | 38.70% | 36.80% |
Sally Beauty Supply | Hair care | ||
Disaggregation Of Revenue [Line Items] | ||
Percentage of net sales | 23.40% | 23.80% |
Sally Beauty Supply | Styling tools and supplies | ||
Disaggregation Of Revenue [Line Items] | ||
Percentage of net sales | 19.50% | 20.20% |
Sally Beauty Supply | Nail | ||
Disaggregation Of Revenue [Line Items] | ||
Percentage of net sales | 10.30% | 10.40% |
Sally Beauty Supply | Skin and cosmetics | ||
Disaggregation Of Revenue [Line Items] | ||
Percentage of net sales | 7.40% | 7.90% |
Sally Beauty Supply | Other Beauty items | ||
Disaggregation Of Revenue [Line Items] | ||
Percentage of net sales | 0.70% | 0.90% |
Sally Beauty Supply | Sales channel, directly to consumer | Company-operated stores | ||
Disaggregation Of Revenue [Line Items] | ||
Percentage of net sales | 93.60% | 94.20% |
Sally Beauty Supply | Sales channel, through intermediary | E-commerce | ||
Disaggregation Of Revenue [Line Items] | ||
Percentage of net sales | 6.40% | 5.80% |
Beauty Systems Group | ||
Disaggregation Of Revenue [Line Items] | ||
Percentage of net sales | 100% | 100% |
Beauty Systems Group | Hair color | ||
Disaggregation Of Revenue [Line Items] | ||
Percentage of net sales | 38.30% | 38.40% |
Beauty Systems Group | Hair care | ||
Disaggregation Of Revenue [Line Items] | ||
Percentage of net sales | 43.50% | 43.50% |
Beauty Systems Group | Styling tools and supplies | ||
Disaggregation Of Revenue [Line Items] | ||
Percentage of net sales | 10.80% | 11.40% |
Beauty Systems Group | Nail | ||
Disaggregation Of Revenue [Line Items] | ||
Percentage of net sales | 2.70% | 2% |
Beauty Systems Group | Skin and cosmetics | ||
Disaggregation Of Revenue [Line Items] | ||
Percentage of net sales | 4.40% | 4.40% |
Beauty Systems Group | Other Beauty items | ||
Disaggregation Of Revenue [Line Items] | ||
Percentage of net sales | 0.30% | 0.30% |
Beauty Systems Group | Sales channel, directly to consumer | Company-operated stores | ||
Disaggregation Of Revenue [Line Items] | ||
Percentage of net sales | 66.30% | 67.50% |
Beauty Systems Group | Sales channel, through intermediary | Distributor sales consultants | ||
Disaggregation Of Revenue [Line Items] | ||
Percentage of net sales | 12.60% | 13.60% |
Beauty Systems Group | Sales channel, through intermediary | E-commerce | ||
Disaggregation Of Revenue [Line Items] | ||
Percentage of net sales | 13.60% | 11.70% |
Beauty Systems Group | Sales channel, through intermediary | Franchise stores | ||
Disaggregation Of Revenue [Line Items] | ||
Percentage of net sales | 7.50% | 7.20% |
Restructuring - Summary of Rest
Restructuring - Summary of Restructuring Expense and Gains (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Restructuring Cost And Reserve [Line Items] | ||
Total in Restructuring | $ 10,406 | $ 1,099 |
Total Restructuring Expenses | 7,726 | 1,099 |
Distribution Center Consolidation and Store Optimization Plan | ||
Restructuring Cost And Reserve [Line Items] | ||
Total in COGS | (2,680) | |
Total in Restructuring | $ 10,406 | |
Transformation Plan | ||
Restructuring Cost And Reserve [Line Items] | ||
Total in Restructuring | $ 1,099 |
Restructuring (Details)
Restructuring (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Distribution Center Consolidation and Store Optimization Plan | ||
Restructuring charges | $ 10,406 | $ 1,099 |
Distribution Center Consolidation and Store Optimization Plan | ||
Distribution Center Consolidation and Store Optimization Plan | ||
Restructuring reserve, beginning balance | 1,291 | |
Cash Payments | (1,645) | |
Non-Cash Amounts | (2,975) | |
Restructuring reserve, ending balance | 7,077 | |
Distribution Center Consolidation and Store Optimization Plan | Sally Beauty Supply | ||
Distribution Center Consolidation and Store Optimization Plan | ||
Restructuring charges | 8,370 | |
Distribution Center Consolidation and Store Optimization Plan | Beauty Systems Group | ||
Distribution Center Consolidation and Store Optimization Plan | ||
Restructuring charges | 2,036 | |
Distribution Center Consolidation and Store Optimization Plan | Closing Costs - Leases | ||
Distribution Center Consolidation and Store Optimization Plan | ||
Non-Cash Amounts | (868) | |
Restructuring reserve, ending balance | 4,002 | |
Distribution Center Consolidation and Store Optimization Plan | Closing Costs - Leases | Sally Beauty Supply | ||
Distribution Center Consolidation and Store Optimization Plan | ||
Restructuring charges | 4,738 | |
Distribution Center Consolidation and Store Optimization Plan | Closing Costs - Leases | Beauty Systems Group | ||
Distribution Center Consolidation and Store Optimization Plan | ||
Restructuring charges | 132 | |
Distribution Center Consolidation and Store Optimization Plan | Closing Costs - Payroll Expenses | ||
Distribution Center Consolidation and Store Optimization Plan | ||
Restructuring reserve, ending balance | 1,949 | |
Distribution Center Consolidation and Store Optimization Plan | Closing Costs - Payroll Expenses | Sally Beauty Supply | ||
Distribution Center Consolidation and Store Optimization Plan | ||
Restructuring charges | 988 | |
Distribution Center Consolidation and Store Optimization Plan | Closing Costs - Payroll Expenses | Beauty Systems Group | ||
Distribution Center Consolidation and Store Optimization Plan | ||
Restructuring charges | 961 | |
Distribution Center Consolidation and Store Optimization Plan | Impairment - Property and Equipment | ||
Distribution Center Consolidation and Store Optimization Plan | ||
Non-Cash Amounts | (1,679) | |
Distribution Center Consolidation and Store Optimization Plan | Impairment - Property and Equipment | Sally Beauty Supply | ||
Distribution Center Consolidation and Store Optimization Plan | ||
Restructuring charges | 1,069 | |
Distribution Center Consolidation and Store Optimization Plan | Impairment - Property and Equipment | Beauty Systems Group | ||
Distribution Center Consolidation and Store Optimization Plan | ||
Restructuring charges | 610 | |
Distribution Center Consolidation and Store Optimization Plan | Inventory Transfer Costs | ||
Distribution Center Consolidation and Store Optimization Plan | ||
Cash Payments | (294) | |
Restructuring reserve, ending balance | 1,038 | |
Distribution Center Consolidation and Store Optimization Plan | Inventory Transfer Costs | Sally Beauty Supply | ||
Distribution Center Consolidation and Store Optimization Plan | ||
Restructuring charges | 1,128 | |
Distribution Center Consolidation and Store Optimization Plan | Inventory Transfer Costs | Beauty Systems Group | ||
Distribution Center Consolidation and Store Optimization Plan | ||
Restructuring charges | 204 | |
Distribution Center Consolidation and Store Optimization Plan | Impairment Operating Lease Assets | ||
Distribution Center Consolidation and Store Optimization Plan | ||
Non-Cash Amounts | (428) | |
Distribution Center Consolidation and Store Optimization Plan | Impairment Operating Lease Assets | Sally Beauty Supply | ||
Distribution Center Consolidation and Store Optimization Plan | ||
Restructuring charges | 345 | |
Distribution Center Consolidation and Store Optimization Plan | Impairment Operating Lease Assets | Beauty Systems Group | ||
Distribution Center Consolidation and Store Optimization Plan | ||
Restructuring charges | 83 | |
Distribution Center Consolidation and Store Optimization Plan | Other Restructuring | ||
Distribution Center Consolidation and Store Optimization Plan | ||
Restructuring reserve, beginning balance | 1,291 | |
Cash Payments | (1,351) | |
Restructuring reserve, ending balance | 88 | |
Distribution Center Consolidation and Store Optimization Plan | Other Restructuring | Sally Beauty Supply | ||
Distribution Center Consolidation and Store Optimization Plan | ||
Restructuring charges | 102 | |
Distribution Center Consolidation and Store Optimization Plan | Other Restructuring | Beauty Systems Group | ||
Distribution Center Consolidation and Store Optimization Plan | ||
Restructuring charges | $ 46 |