Market Overview

Will Amazon Buy Sally Beauty Supply?

Will Amazon Buy Sally Beauty Supply?
Related AMZN
XPO's Results Have Amazon's 800-Pound Gorilla Marks All Over It
Today's Pickup: Smiley Sails Away From NYC; Walmart Builds An Intermodal Box Operation
Western Union: 4+% Yield, But I Think It's A Value Trap (Seeking Alpha)
Related SBH
RayJay Stays Bearish On Sally Beauty After Q1 EPS Beat
Earnings Scheduled For February 5, 2019

Sally Beauty Holdings, Inc. (NYSE: SBH) could be a possible takeover target from, Inc. (NASDAQ: AMZN) according to a new report from D.A. Davidson.

With Ulta Beauty Inc (NASDAQ: ULTA) shares trading up nearly 4 percent on rumors of a possible buyout from Wal-Mart Stores Inc (NYSE: WMT), Sally Beauty could be a worthy target that would enable Amazon to break into the beauty market.

“Beauty has been a hard category to crack for AMZN, and it has entered a partnership with SBH to test in the Dallas area same-day delivery of beauty orders fulfilled by Sally Beauty retail store,” said D.A. Davidson analyst Linda Bolton Weiser.

Sally Beauty’s uniquely high gross margin of 55 percent and a high number of retail stores, over 2,900, were key reasons why Sally Beauty became the beauty partner of Amazon according to Weiser.

Interestingly, Sally Beauty’s strategy has not been to compete with bigger competitors Wal-Mart and Target Corporation (NYSE: TGT). Nearly 50 percent of the company’s US sales come from private label products or products exclusive to the store.

“Rather, it’s strategy is to keep raising the percentage of sales from exclusive products over time, which enhances gross margin,” said Weiser

The idea is in a complete takeover, Amazon would easily be able to implement Sally’s private label beauty products to its platform, immediately bolstering their beauty portfolio with high margin products.

D.A. Davidson maintains a Buy rating on Sally Beauty with a $21 price target.

At time of publication, shares of Sally were down 4.42 percent at $16.97. Amazon shares were down 1.08 percent at $986.21.

Related Links: Ulta Beauty Loses Another Bull


Image Credit: By SallyBeauty (Own work) [CC BY-SA 3.0 (], href="">via Wikimedia Commons

Latest Ratings for AMZN

Feb 2019Pivotal ResearchInitiates Coverage OnBuy
Feb 2019Raymond JamesMaintainsOutperformOutperform
Feb 2019Deutsche BankMaintainsBuyBuy

View More Analyst Ratings for AMZN
View the Latest Analyst Ratings

Posted-In: DA DavidsonAnalyst Color Long Ideas News Reiteration M&A Analyst Ratings Trading Ideas Best of Benzinga


Related Articles (AMZN + SBH)

View Comments and Join the Discussion!

Jon Najarian Sees Unusual Options Activity In LendingClub And Freeport-McMoRan

OncoSec Shares Spike 17% After New Data Defended