Sally Beauty Holdings Inc. Outlook Revised To Stable On Improving Performance And Credit Metrics; Ratings Affirmed

  • U.S.-based beauty supplies retailer and distributor Sally Beauty Holdings Inc. reported stabilizing performance trends in the first quarter of fiscal 2019 and recently repurchased a modest amount of debt, resulting in credit metrics better than our previous forecast.
  • On March 22, 2019, S&P Global Ratings is revising its outlook on Sally Beauty to stable from negative. At the same time, we are affirming all ratings on the company, including the 'BB-' issuer credit rating.
  • The stable outlook reflects our expectation that credit metrics will remain relatively flat as modestly lower debt offsets a slight contraction in EBITDA.
NEW YORK (S&P Global Ratings) March 22, 2019--S&P Global Ratings today took 
the rating actions listed above. The outlook revision reflects improving 
performance trends in recent quarters, with consolidated same-store sales 
slightly positive (0.3%) in the first quarter of fiscal 2019, a sequential 
improvement from previous quarters. The company's recent debt repurchase of 
about $60 million provides modest financial cushion as the company executes 
its transformation plan.

The stable outlook reflects our expectation for slight improvement in credit 
metrics over the next 12 months, on stabilizing performance trends. We also 
expect the company to generate decent FOCF of about $200 million, which could 
be used for additional debt prepayment.
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