Sally Beauty Holdings Inc. is testing with Amazon.
The beauty retailer said it has partnered with Amazon Prime Now to test a two-hour delivery model in the Dallas market.
“There has historically been very little overlap between Amazon Prime Now and Sally’s existing customer bases and we hope to attract new customers with this model,” Sally chief executive officer Chris Brickman said on the company’s earnings call Thursday morning. “While the program is still undergoing testing, we plan to work with Amazon to introduce Prime Now to other metropolitan cities if it proves effective.”
Sally anticipates that the Prime Now program would get it in front of a more affluent customer. “It is still a challenging market on the retail side.…The real focus for us in working with them on Prime Now is access to customers that we wouldn’t otherwise access,” said Barry Miller, senior director of information security and compliance at Sally. “The average income demographic of Amazon Prime Now customers is three times an average Sally customer, and we find very little overlap between the customers that are buying through that channel versus our current customers.”
Sally also has an Amazon store, which is a “reasonable percentage” of total sales, executives noted, adding that benefits of Amazon outweigh negatives, and the retailer will continue to expand there over time. The company’s Amazon store includes products from Palladio, SheaMoisture, Infusium 23, Miss Jessie’s, Ardell, Orly and other brands.
Sally’s Amazon test comes as the marketplace is said to be looking to ramp up its beauty offerings — specifically those at the higher end of the price spectrum. Sources have said Amazon inked a partnership agreement with luxury beauty retailer Violet Grey that could potentially land it new brands.
Sally executives touched on Amazon after reporting stagnant year-over-year sales and a slight dip in earnings. For the third fiscal quarter, the company posted a 2 percent dip in net earnings, to $66.5 million. Net sales were flat at $998 million, and diluted earnings per share were up 6.5 percent year-over-year, to 49 cents. By segment, Sally Beauty Supply sales were down 1.3 percent year-over-year to $594.9 million, while the Beauty Systems Group had a 1.9 percent jump to $403.2 million in net sales. Sally said incremental sales from new stores — 76 for the Sally Beauty Supply division, 40 for the Beauty Systems Group — were offset by foreign currency translation, which negatively impacted revenue growth by $10.2 million.
The company maintained flat full-year consolidated same-store sales growth guidance, and now expects full-year net new store growth of about 1.5 percent.
In addition to its Amazon-related expansions, Sally Beauty is working on rolling out its own loyalty program. In April, the business launched the program in about 300 stores in Florida and Georgia as a test pilot.
“We want to increase traffic over time by acquiring more loyalty members and engaging with them on a regular basis via e-mail and direct mail communications,” Brickman said. Sally will assess the pilot over the next four to six months and potentially roll it out into all U.S. and Canada stores. The business is also ramping up its influencer strategy, and will introduce a color collaboration with an influencer in the fall.
Also on Wednesday, Sally Beauty reported flat sales and decreased earnings for the third quarter.
The company’s net earnings were down 2 percent in the quarter, to $66.5 million from $67.9 million. Net sales were flat from the prior-year period, at $998 million. Diluted earnings per share were up 6.5 percent year-over-year, to 49 cents.
For the quarter, Sally Beauty Supply sales were $594.9 million, down 1.3 percent year-over-year, while the Beauty Systems Group posted $403.2 million in net sales, up 1.9 percent from the prior-year period.
The company said that incremental sales from new stores were partially offset by foreign currency translation, which impacted revenue growth by $10.2 million.