Shares of Ulta Beauty (ULTA) and Sally Beauty (SBH) are under pressure on Monday after Amazon (AMZN) announced that professional beauty products were now available on Amazon Business. The e-commerce's Amazon Professional Beauty Store offers professional stylists, barbers and aestheticians beauty supplies typically found in salon and spas.
PROFESSIONAL BEAUTY STORE: In a blog post, Amazon announced that professional beauty products are now available on Amazon Business. "Amazon Business launched the Amazon Professional Beauty Store to offer professional stylists, barbers, and estheticians a convenient, custom shopping experience with great selection. Discover top professional-use products in the new store from brands like Wella Color Charm, RUSK, and OPI Professional, plus other beauty supplies typically found in salons and spas," the company said. "The new professional-use selection requires a license to purchase products, such as state-issued cosmetology, barber, or esthetician licenses. Stylists can create a free Amazon Business account and upload their license to gain access to the brands their customers know and love."
RISK SEEN PREVIOUSLY FOR BEAUTY RETAILERS: This is not the first time Amazon is being seen as a potential competitor for beauty retailers. Earlier this year, the e-commerce giant launched a value priced private label skincare brand named "Belei." Commenting on that previous launch, Jefferies analyst Stephanie Wissink told investors at the time that it "came as a bit of a surprise," adding that her sense from contacts inside and outside of Amazon is that it was meant to establish a stronger presence, refine a more robust beauty platform and provide data to improve access to national brands. Arguing that it has become increasingly competitive for smaller brands to get into Sephora and Ulta, Wissink said she expected Amazon to gain access to a growing number of small brands. Other publicly traded skincare and beauty product makers include Estee Lauder (EL), Revlon (REV), Coty (COTY) and e.l.f. Beauty (ELF).
WHAT'S NOTABLE: Adding even more pressure to Sally Beauty, increased competition from Amazon comes as its stock had already dropped about 20% due to disappointing earnings. On the other hand, shares of Ulta have been outperforming, getting a boost from new cosmetics lines from celebrity Kylie Jenner and Youtuber James Charles.
PRICE ACTION: In afternoon trading, shares of Sally Beauty have plunged over 13% to $12.84, while Ulta's stock has dropped almost 4% to $342.82.