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Sally Beauty-Alliance Data to Launch New Credit Card Program

Zacks Equity Research

Sally Beauty Holdings, Inc. SBH has inked a multi-year deal with Alliance Data’s card service business to introduce a new private label credit card program. The program will be applicable to the Sally Beauty Supply (SBS) and Beauty Systems Group (BSG) segments. Per the deal, the company is expected to test the program in selected stores in second-quarter fiscal 2020. Following the test, the program will be rolled out in all stores across United States and e-commerce platforms.

With this new program, retail and professional customers will be able to earn rewards by purchasing their preferred hair color, hair care and other beauty supplies. Also, the program includes other cardholder benefits.

This collaboration will enable Sally Beauty to enhance its existing loyalty program — Sally Beauty Rewards — that boasts a member base of more than 15 million. Moreover, improvement in customer loyalty and better customer relationship will provide payment flexibility to professional customers that will contribute to the BSG segment.

According to sources, Sally Beauty will be able to leverage Alliance Data's Frictionless Mobile Credit capability. This will make credit card application fast and convenient as well as increase the number of customers. 

Apart from these factors, the company is undertaking other steps to enhance customers’ shopping experience. Sally Beauty initiated tests of the new Oracle based point-of-sale systems in the BGS and SBS segments as well as intends to install the same in at least 1,400 stores in fiscal 2019. Additionally, the Zacks Rank #3 (Hold) company is upgrading its websites along with e-commerce and mobile capabilities for the segments. Also, it is on track to launch applications for the same.

All said, we hope that such well-chalked efforts will be able to boost this stock. The company’s shares have dipped 1.4% in the past three months compared with the industry’s decline of 22.7%.

Beauty Stocks Worth a Glance

e.l.f Beauty ELF has a long-term earnings growth rate of 3.8% and a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Shiseido SSDOY has a long-term earnings growth rate of 20% and carries a Zacks Rank #2 (Buy).

The Estee Lauder Companies EL has a long-term earnings growth rate of 13% and a Zacks Rank #2.

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