Sally Beauty Holdings stock quickly dropped Monday to a nine-year low after Amazon announced its Professional Beauty Store, signaling the Denton company is not out of financial distress.
When markets opened Monday, Sally Beauty’s stock opened at $14.79 a share — then closed at $12.30 a share after the announcement. The stock did not recover much Tuesday, closing at $12.57 a share. The Amazon store will act as a direct competitor to Denton-based Sally, which operates Sally Beauty Supply as well as Beauty Systems Group stores, which are aimed at professional stylists.
Sally Beauty representatives would not comment directly, and issued a statement through New York-based public relations firm Joele Frank.
“As a leading company in a highly competitive area of retail, Beauty Systems Group has fundamental strengths in our distribution of premium branded products, including exclusive contracts, approximately 1,400 stores and access to one of the largest networks of professional distributor sales consultants in North America,” the statement reads.
The company has been undergoing “transformation efforts” since last year, and it shut down an office building and distribution center on Morse Street earlier this year. Despite reported staff reductions in April 2018, city of Denton data still says the company has 950 employees in Denton — the same number Sally had in April 2017.
The city canceled its economic incentives deal with Sally after the company announced it was leaving the Morse Street location. At the time, city officials said they only paid $542 of an incentive to Sally because the company didn’t meet targets for average salaries and the number of employees at the site. If the company had met the targets, Sally Beauty could have gotten $72,000 in tax rebates over three years.
The company went back to the city for more incentives, though nothing has been adopted. The Economic Development Partnership Board discussed incentives for Sally in a closed session in April, and the matter was slated for a public hearing at a City Council meeting April 25. However, the item to create a commercial/industrial tax abatement zone was pulled from the agenda.
Jessica Rogers, director of economic development for the city, said a Sally Beauty deal is still on the table. Because it’s an active project, no information will be released, including the company’s application for an economic incentive, she said.
“They’re an important business in our community and we speak with them as often as we need to find out what resources they might need,” she said. “At this point, there’s still an active project.”
In its second quarter investors report, released in May, the company showed net sales were still down 3% compared to the previous year, and consolidated same-store sales were down 0.5% for the quarter.
Other beauty retailers were hit by the news, but not nearly as hard. Ulta Beauty, which also has a large market with professional stylists, dipped 3.2% at market close Monday.