Moody's shifts Sally Beauty view to stable

Moody's Investors Service said it changed the outlook for Sally Holdings LLC to stable from negative. Concurrently, Moody's affirmed Sally’s Ba2 corporate family rating and its Ba2-PD probability of default rating. The Ba1 rating of the senior secured term loan, the Ba2 rating of the senior secured notes and the Ba3 rating of the senior unsecured notes was also affirmed. Moody's also upgraded the company's speculative grade liquidity rating to SGL-1 from SGL-2.

"Sally's operating performance was better than expected during the pandemic as it quickly pivoted to online sales when its stores were temporarily closed and its concentration in a somewhat less discretionary hair products helped with overall consumer demand," said Mickey Chadha, a Moody's vice president, in a press release.

"Governance is also a key ratings driver of the change in outlook to stable as the company's financial strategies have been prudent reflected by its meaningful debt repayment and very good liquidity," Chadha further stated.

The upgrade to SGL-1 reflects Sally's improved liquidity from improved free cash flow, higher cash balances and an undrawn $500 million asset-based revolving credit facility, the agency noted.

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