Moody's lifts Sally Beauty

Moody's Investors Service said it upgraded the corporate family rating of Sally Holdings LLC to Ba1 from Ba2 and its probability of default rating to Ba1-PD from Ba2-PD.

Concurrently, Moody's upgraded the rating of the company's senior secured term loan to Baa3 from Ba1, upgraded the rating of its senior secured notes to Ba1 from Ba2 and upgraded the rating of its senior unsecured notes to Ba2 from Ba3.

The outlook is stable, and the company's speculative grade liquidity rating remains SGL-1.

“Governance is a key driver of the upgrade as the company’s financial strategies have been prudent reflected by its meaningful debt repayment and very good liquidity,” said Moody's vice president Mickey Chadha in a news release.

“Although we expect some volatility in earnings due to unprecedented macro and inflationary pressures putting stress on the company’s core customer, Sally's overall operating performance has been quite steady through past economic cycles and credit metrics are expected to remain strong as concentration in somewhat less discretionary hair products is a positive in the long run.”

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