Simeon Gutman Issues Sell Rating for Sally Beauty Amidst Uncertain Consumer Trends and Economic Pressures

Analyst Simeon Gutman from Morgan Stanley maintained a Sell rating on Sally Beauty (SBH – Research Report) and keeping the price target at $10.00.

Simeon Gutman has given his Sell rating due to a combination of factors impacting Sally Beauty’s financial outlook. Despite the company’s efforts to mitigate challenges through strategic initiatives, uncertain consumer trends and external economic pressures are expected to hinder topline growth. The company’s recent financial results have shown a decline in comparable sales, attributed to temporary setbacks like adverse weather and health-related issues, which have led to a downward revision in future guidance.
Additionally, the dynamic tariff environment adds an element of unpredictability to consumer spending, further complicating the company’s growth trajectory. While Sally Beauty is making progress with its cost reduction program, the potential for significant EBIT margin expansion remains limited unless there is a substantial acceleration in comparable sales. These factors, combined with challenging gross margin comparisons and the need for continued reinvestment, suggest a muted outlook for sales and EBIT growth in the near term, justifying the Sell rating.