⚠️ Caution: Stagnant Comparable Sales, Ongoing Store Closures
Sally Beauty Holdings (NYSE: SBH) faces persistent operational challenges: roughly flat comparable sales, a shrinking store base (3,066 Sally Beauty stores worldwide at June 30, 2026, down from 3,549 at the end of fiscal 2021), flat revenue, and competition that includes online retailers. S&P Global Ratings rates Sally Beauty Holdings, Inc. BB, below investment grade, and in 2024 the company refinanced its 5.625% Senior Notes due 2025 with 6.75% Senior Notes due 2032. The “Fuel for Growth” program, which the company says it launched in fiscal 2023, targets savings in sourcing, supply chain, distribution and non-trade spending. The store footprint is shrinking and comparable sales have been roughly flat, so underwrite each store on its own sales, co-tenancy and lease terms.
| Metric | Details |
|---|---|
| Parent / Legal Entity | Sally Beauty Holdings, Inc. (NYSE: SBH) |
| Credit Ratings | S&P: BB |
| Investment Grade Status | Below Investment Grade |
| Sector | Specialty Retail: Beauty & Salon Supply |
| Ownership | Public (NYSE: SBH); HQ Plano, Texas (moved from Denton; Plano address on SEC filings since December 2025) |
| US Location Count | 2,300 Sally Beauty stores in the U.S. and Puerto Rico plus 1,208 BSG stores, including 132 franchised (September 30, 2025) |
| Geographic Concentration | Nationwide; Texas (268), California (243) and Florida (166) have the most U.S. Sally Beauty stores (September 30, 2025) |
| Median asking cap rate | See the live table below |
| Typical Lease Term | Average store lease of 5 to 10 years with renewal options (company 10-K); confirm remaining term |
| Guarantee Type | Varies; confirm whether Sally Beauty Holdings, Inc. or a subsidiary signs or guarantees the lease |
| Typical Building Size | About 1,700 SF average for Sally Beauty stores in the U.S. and Canada (small-box inline specialty retail) |
Sally Beauty Business Overview & NNN Investment Profile
Sally Beauty Holdings operates two primary segments: Sally Beauty Supply (3,066 stores worldwide at June 30, 2026, selling beauty supplies, hair care products, nail products, and salon tools to both consumers and licensed cosmetologists) and Beauty Systems Group (BSG), a smaller chain of 1,320 stores, including franchises, that serves licensed beauty professionals. The company was founded in 1964 in New Orleans and has grown into what it describes as a leading international specialty retailer and distributor of professional beauty supplies. Public on NYSE since 2006, Sally Beauty moved its corporate headquarters from Denton, Texas to a leased office of about 145,000 SF at 7900 Windrose Avenue in Plano, Texas; its SEC filings have listed the Plano address since December 2025.
For NNN investors, Sally Beauty is a below-investment-grade specialty retail tenant: S&P Global Ratings rates Sally Beauty Holdings, Inc. BB. The company refinanced its 5.625% Senior Notes due 2025 with 6.75% Senior Notes due 2032 in 2024 and generated $275 million of operating cash flow in fiscal 2025; past cash flow does not assure future rent. Operating results have been mixed: consolidated comparable sales rose 0.3% in fiscal 2025 and were flat in the June 2026 quarter, and the Sally Beauty store count fell from 3,549 at the end of fiscal 2021 to 3,066 at June 30, 2026. In the broader credit tenant ratings table, Sally Beauty is classified below investment grade; compare peer ratings and their sources there rather than relying on a ranking on this page.
Sally Beauty Credit Rating Analysis
Sally Beauty is not investment grade. Sally Beauty Holdings, Inc. carries issuer rating of BB from S&P Global Ratings: below the BBB-/Baa3 investment grade threshold. Ratings checked October 8, 2026. See the investment grade credit tenant ratings table.
S&P Global Ratings rates the parent, Sally Beauty Holdings, Inc., BB, which is below the BBB- investment-grade threshold. In a release dated April 20, 2021, Moody’s addressed the corporate family rating of the debt-issuing subsidiary Sally Holdings LLC. We have not verified Moody’s current rating for that entity from a primary source, so this page does not show one. In 2024 the company issued 6.75% Senior Notes due 2032 to refinance the 5.625% notes due 2025.
Source: S&P Global Ratings BB. Ratings checked October 8, 2026.
Peer ratings appear in the comparable tenants table below. Sally Beauty’s fiscal 2025 Form 10-K says Sally competes with other beauty supply stores, mass merchandisers, online retailers, drug stores and department stores, among others. Sally Beauty’s response has been digital channel investment (global e-commerce was 10.7% of net sales in fiscal 2025 and 12% in the June 2026 quarter), loyalty program expansion, and cost discipline; comparable sales have been roughly flat, with the Sally segment up 1.6% and BSG down 2.1% in the June 2026 quarter.
Sally Beauty NNN Lease Structure
Sally Beauty says its average store lease runs five to ten years with customary renewal options, and many of its leases have scheduled rent increases over the initial term and extensions. Lease structure varies by center. Confirm the tenant entity and any guarantor named in the lease, then review that entity’s own credit: an agency rating applies only to the entity rated (S&P rates Sally Beauty Holdings, Inc.), and a store lease may be signed by a subsidiary with no parent guaranty. No executed Sally Beauty guaranty was reviewed for this page. The company says its stores are generally located in strip shopping centers occupied by other high-traffic retailers such as grocery stores, mass merchants and home improvement centers (fiscal 2025 Form 10-K), so a Sally Beauty store is often one space in a multi-tenant center rather than a freestanding single-tenant building.
Investors evaluating a Sally Beauty property should obtain the specific lease and verify: current rent schedule, remaining base term, renewal option structure, co-tenancy provisions given the typical multi-tenant context, kick-out clauses tied to sales performance or anchor co-tenant status, landlord consent rights on assignment or subletting, and whether the company has signaled plans to close or relocate the store. No comprehensive current closure list was identified in the cited filings; confirm the plans for the specific site. An unusual concession request from the tenant may signal that the location is at elevated risk of non-renewal.
Sally Beauty NNN Cap Rate & Pricing Trends
Insufficient comparable sample: InvestmentGrade.com does not currently track at least three active Sally Beauty listings with a published asking cap rate, so no Sally Beauty median is shown. A multi-tenant shopping center that includes a Sally Beauty store is not a single-tenant Sally Beauty benchmark. Live asking cap rates for comparable tenants:
| Tenant | S&P / Moody’s | Median asking cap rate | Middle half of listings | Listings | Median vs. 10-year Treasury |
|---|---|---|---|---|---|
| Tractor Supply | BBB / Baa1 | 6.05% | 6.00% to 6.34% | 40 | +81 bps |
Active listings InvestmentGrade.com tracks with an asking cap rate (stated in the listing, or computed from its stated income and price when no rate is stated), listings last observed October 19, 2026. Asking cap rates are not closed-sale cap rates. The middle half is the range from the 25th to the 75th percentile of listings. The 10-year Treasury yield is 5.24% as of October 1, 2026 (FRED series DGS10). Ratings are the agency ratings in our ratings database for the entity shown, which may be a parent company; the rating type (for example issuer, senior unsecured debt, long-term debt or revenue bond ratings) varies by company and is shown on each tenant page. A rating applies to a lease only if the rated entity signs or guarantees it, so confirm the tenant and any guarantor in the lease. n/a means no verified rating is on file. Not shown because fewer than 3 active listings with a published cap rate were observed: Sally Beauty, Guitar Center, Chuck E. Cheese, GameStop.
Because Sally Beauty stores are small inline spaces, confirm whether an offering is the store space alone or a shopping center with other tenants, and price each accordingly. For guidance on pricing small-ticket specialty retail and how to evaluate co-tenancy risk in the multi-tenant context, review the investment grade guide framework.
Sally Beauty Real Estate Footprint & Store Optimization
Sally Beauty operated 3,066 Sally Beauty stores worldwide at June 30, 2026, down from 3,549 at the end of fiscal 2021; at September 30, 2025, 2,300 of its 3,096 stores were in the U.S. and Puerto Rico. The average store in the U.S. and Canada is about 1,700 SF, typically in a strip shopping center with grocery stores or mass merchandisers. Texas (268 stores), California (243) and Florida (166) have the most U.S. stores, followed by Ohio (107) and North Carolina (85).
The Beauty Systems Group (BSG) segment operates separately with a distinct store format: company-operated stores average about 2,700 SF, are located mainly in secondary strip shopping centers and serve licensed beauty professionals rather than general consumers. BSG had 1,320 stores, including franchises, at June 30, 2026. In the June 2026 quarter, BSG comparable sales fell 2.1% while the Sally Beauty segment rose 1.6%. For NNN investors, Sally Beauty-branded properties and BSG-branded properties should be evaluated separately given the different customer base, rent economics, and operational trajectory.
Sally Beauty Forward Outlook
The forward outlook for Sally Beauty depends on execution of the Fuel for Growth cost reduction program, stabilization of Sally Beauty segment comparable sales, continued positive contribution from the BSG professional-segment, and successful digital channel expansion. Key risks include competition from other beauty retailers and online sellers, labor availability and wage costs (both discussed in the fiscal 2025 Form 10-K), and the potential for further store closures.
Investors underwriting a Sally Beauty property should model a credible scenario in which the lease is not renewed at the next expiration, particularly for locations with weak co-tenancy or limited demographic strength. Price the property such that the acquisition makes sense on alternative-use economics (small-box specialty retail, mobile accessories, nail salon, hair salon, quick-service food counter, service retail) within 12-24 months of acquisition if the lease were to terminate. Any in-place rent beyond the near-term base should be treated as upside rather than certain cash flow.
Sally Beauty NNN Investment: Pros & Cons
| Pros | Cons |
|---|---|
| Rated, Refinanced Debt: S&P rates Sally Beauty Holdings, Inc. BB (below investment grade); the 2024 refinancing replaced notes due 2025 with notes due 2032. | Comparable Sales Challenges: Comparable sales have been roughly flat (up 0.3% in fiscal 2025, flat in the June 2026 quarter) amid competition that includes mass merchandisers, online retailers and other beauty supply stores (fiscal 2025 Form 10-K). |
| Small-Box Flexibility: The roughly 1,700 SF average inline format may suit some replacement retailers or service users, subject to local demand, lease restrictions and build-out costs. | Store Closure Uncertainty: The company continues to close underperforming stores (85 Sally Beauty closures in fiscal 2025). No comprehensive current closure list was identified in the cited filings; confirm the specific site. |
| Multi-Tenant Context Risk: The company says its stores are generally located in strip shopping centers (fiscal 2025 Form 10-K); store performance can depend on anchor and co-tenancy quality. | |
| Digital Disruption Continues: The specialty beauty supply category faces sustained online competitive pressure; long-term physical-store demand is uncertain. |
Comparable NNN Tenants
| Tenant | Rating | Sector |
|---|---|---|
| Ulta Beauty | Not rated | Beauty Specialty Retail |
| Sephora | Not tracked (LVMH parent) | Beauty Specialty Retail |
| GameStop | Not rated | Specialty Retail Video Games |
| Guitar Center | no verified rating | Specialty Retail Music |
| Sally Beauty | BB | Beauty & Salon Supply |
Frequently Asked Questions About Sally Beauty NNN Investments
No. S&P Global Ratings rates Sally Beauty Holdings, Inc. BB, below the BBB- investment-grade threshold. A Moody’s release dated April 20, 2021 addressed the corporate family rating of the subsidiary Sally Holdings LLC; we have not verified Moody’s current rating for that entity, so none is shown. In 2024 the company refinanced its 5.625% Senior Notes due 2025 with 6.75% Senior Notes due 2032, and it generated $275 million of operating cash flow in fiscal 2025. Past cash flow does not assure future rent; review the credit of the entity that signs or guarantees the lease.
What asking cap rates do Sally Beauty NNN properties carry?
Insufficient comparable sample: InvestmentGrade.com does not currently track at least three active Sally Beauty listings with a published asking cap rate. The live table on this page shows comparable tenants. A multi-tenant center that includes a Sally Beauty store is not a single-tenant Sally Beauty benchmark. Pricing for a specific property depends on the remaining lease term, rent level, location and lease guarantor, and asking cap rates are not closed-sale cap rates.
Fuel for Growth is Sally Beauty’s cost reduction and operational optimization program. The company says it launched the program in fiscal 2023; its fiscal 2025 annual report describes work on pooled distribution, store shipping frequency, vendor pricing, sourcing, supply chain, best cost location and non-trade spending.
Sally Beauty operated 3,066 Sally Beauty stores worldwide at June 30, 2026 (2,300 were in the U.S. and Puerto Rico at September 30, 2025), down from 3,549 at the end of fiscal 2021. Separately, the Beauty Systems Group (BSG) professional-only segment had 1,320 stores, including franchises, at June 30, 2026. The company moved its corporate headquarters from Denton to Plano, Texas; its SEC filings have listed the Plano address since December 2025.
Underwrite the credit of the entity that signs or guarantees the lease, which may differ from the rated parent, and do not treat contractual rent as assured. Model a credible scenario in which the lease is not renewed at the next expiration, particularly for stores in weaker co-tenancy contexts or with limited sales visibility. Price the property such that the acquisition makes sense on alternative-use economics (small-box specialty retail, service retail, nail or hair salon, QSR counter) within 12-24 months of acquisition if the lease were to terminate.
Possibly, but it depends on the space. Sally Beauty stores average about 1,700 SF, a size that may suit some other retail, service, food or medical users. Whether a space can be re-leased, and at what cost, depends on zoning and the center’s use restrictions, landlord consent, utilities, layout, the build-out budget and local tenant demand. Get leasing and construction estimates for the specific space before relying on a replacement tenant.
When the buyer owns the building, a cost segregation analysis may reclassify part of the purchase price, such as site improvements and some building systems and equipment, into 5-, 7- or 15-year property.
Under IRC section 168(k), 100% bonus depreciation can apply to qualified property, such as tangible property with a MACRS recovery period of 20 years or less, that is both acquired and placed in service after January 19, 2025. Used property qualifies only in certain cases, some property is excepted, and a taxpayer can elect out (IRS Publication 946).
How much qualifies varies widely by property; support any allocation with appropriate records and analysis, such as an engineering-based study. Depreciation is generally available only on property the investor owns. Land cannot be depreciated, so on a ground lease where the tenant owns the building the investor may have little or nothing to depreciate, and improvements or equipment owned by the tenant are not the landlord’s to depreciate. Confirm in the lease and title documents who owns the building, improvements and equipment.
On a taxable sale, depreciation taken on section 1245 property is generally recaptured as ordinary income, limited to the gain on that property (IRC 1245(a)). A qualifying 1031 exchange may defer some gain, but section 1245(b)(4) can still require ordinary-income recapture, including when non-section-1245 property is received. This is general information, not tax advice; consult a tax professional. See the Depreciation by NNN Property Type.
Related: Gas Station Bonus Depreciation
Sally Beauty Net Lease Property: Buying, Selling and Financing
Buying: We find on-market and off-market Sally Beauty properties, review the lease and the tenant’s credit, and compare pricing with current listings. On the majority of transactions, there is no separate fee to you as the buyer; the listing broker pays a cooperating commission.
Selling: We can prepare an opinion of value from current listings and recent sales and, when it fits your goals, run a confidential sale to private investors, family offices and institutional buyers. See our guide to off-market sales.
Financing: Investment Grade Capital, a service of Investment Grade LLC, matches buyers and owners with lenders for acquisitions and refinancing.
1031 exchanges: Tell us your identification and closing deadlines so we can plan the search around them.
Request an NNN investment consultation or email team@investmentgrade.com.
Related NNN Tenants
Sally Beauty in a 1031 exchange: price the tenant and the fallback real estate separately
Sally Beauty is a below-investment-grade specialty retail tenant, so buyers should not underwrite the cap rate as if the lease alone solves the risk. Compare the BB credit profile, remaining term, co-tenancy, and small-box re-tenanting economics against current 2026 NNN cap rates before accepting the headline yield.
For exchange buyers building a tenant shortlist, pair this page with best investment grade NNN tenants for a 1031 exchange to decide whether Sally Beauty belongs in the high-yield bucket or should be traded up into stronger credit.
Sally Beauty vs. stronger 1031 replacement tenants
Sally Beauty is a below-investment-grade small-box specialty retail tenant that should be compared against stronger replacement-property credits before a 1031 buyer accepts BB tenant risk. The underwriting question is whether the cap-rate spread pays for store-optimization risk, co-tenancy exposure, and fallback small-box retail value.
Use the 1031 tenant-credit shortlist to evaluate stronger alternatives and the 2026 NNN cap-rate framework to decide whether Sally Beauty belongs in the high-yield bucket or should be traded up into cleaner credit.
