Debt reduction and positive sales momentum lead to Sally Beauty's upgrade to 'BB': S&P Global

Sally Beauty Holdings Inc. (NYSE:SBH), a beauty products retailer based in Denton, Texas, has been upgraded from 'BB-' to 'BB' by S&P Global Ratings due to successful debt reduction and sustainable operational momentum. The company's first quarter of the 2025 fiscal year, ending December 31, 2024, exhibited positive comparable store sales, gross margin expansion, and improved profitability across both segments.

The recent debt reduction and operational momentum have led to expectations that leverage will remain at or below 2.5x over the next 12 to 24 months. Sally Beauty’s market position and business investments support growth expectations, despite an uncertain operational environment. A stable outlook from S&P Global Ratings reflects anticipated strong free operating cash flow and consistent profitability, with ongoing investments in branding and digital transformation likely to drive growth in comparable store and omnichannel sales.