Shares of Sally Beauty Supply (NYSE:SBH), a retailer focused on exactly what its name implies, soared 24% in early trading on May 6. The news driving the advance was the company's pre-market earnings release. But the story here is actually a bit bigger.
Sally Beauty's fiscal second-quarter 2021 sales increased 6.3% year over year. Same-store sales rose 6.5%, with global e-commerce sales higher by 56%. Adjusted earnings per share came in at $0.57, up 148% versus the year-ago period. Wall Street was expecting quarterly earnings of $0.15 per share, so this was a significant earnings beat, which is the type of thing investors like to see.
However, the bigger takeaway here is that Sally Beauty's U.S. business is starting to rebound. That's being driven by the economy reopening and the vaccine rollout, as well as stimulus checks. The company noted that its U.S. operations saw a material increase in customer demand as the quarter progressed. And while Sally Beauty isn't yet willing to provide formal guidance, it certainly looks like things are moving in the right direction. So while the Q2 earnings in and of themselves were pretty good, a quick read into the numbers suggests that the next quarter or two could be equally, if not more, exciting.
Sally Beauty Supply's business was hit hard by the efforts to slow the fast-spreading coronavirus pandemic. But the company's recovery looks like it is underway, given that same-store sales in the fiscal first quarter actually fell 3.7%. It makes sense that long-term investors would be pleased to see that the company is starting to get back on track.