Sally Beauty Holdings, Inc. SBH is using product innovation and brand refreshes to improve performance across its own-brand portfolio. Management views innovation as a key competitive differentiator and central to unlocking growth across both business segments.
At the Sally segment, innovation is supporting strong performance across both own and national brands. Newness and brand refresh initiatives are contributing to improved performance across own brands such as Beauty Secrets, ion Luxe, Salon Care, and Texture ID. Beyond product updates, marketing activations such as Color Fest are also helping build awareness of proprietary brands like ion, with management noting a residual benefit for the care category.
Color remained a standout category in the third quarter of fiscal 2026, growing 8% across the Sally segment and 9% in Sally U.S. and Canada. However, care remains a challenge, with the Global Sally Beauty segment’s care category down 6% year over year in the fiscal third quarter. Management believes that the hair-care reset, expanded men’s assortment and greater product newness can support improvement in hair-care performance over the coming quarters.
The company is also expanding into new categories, with fragrance providing an opportunity to increase basket size. Fragrance expanded from 1,000 to 2,000 stores, with management saying customers are generally adding fragrance to existing baskets rather than coming specifically for it.
Sally Beauty’s focus on innovation and assortment expansion is supporting performance across its proprietary brands while creating opportunities to broaden customer engagement and increase basket size. These initiatives are intended to support growth in weaker categories while the company continues to pursue margin improvement through broader strategic initiatives, including Fuel for Growth.
The Zacks Rundown for SBH
Shares of this Zacks Rank #3 (Hold) company have gained 20.9% in the past three months against the industry’s 4.5% decline.
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From a valuation standpoint, SBH trades at a forward price-to-earnings ratio of 7.15, lower than the industry’s average of 14.24.
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The Zacks Consensus Estimate for SBH’s current and next fiscal year earnings implies a year-over-year rise of approximately 9% each.
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Stocks to Consider
Some better-ranked stocks have been discussed below:
Five Below, Inc. FIVE 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 20.1% and 57.6%, respectively, from the year-ago figures. FIVE delivered a trailing four-quarter earnings surprise of 68.3%, on average.
Fossil Group, Inc. FOSL 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 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.
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Sally Beauty Holdings, Inc. (SBH): Free Stock Analysis Report
Fossil Group, Inc. (FOSL): Free Stock Analysis Report
Five Below, Inc. (FIVE): Free Stock Analysis Report
Itochu Corp. (ITOCY): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).