Shares of Sally Beauty Holdings (SBH) dropped in morning trading after the beauty supplies retailer announced the resignation of its chief financial officer.

CFO RESIGNATION: Sally Beauty said in a regulatory filing this morning that Mark Flaherty notified the company yesterday that he is resigning from his role as senior vice president and CFO. Flaherty, whose resignation is effective September 30, is stepping down to pursue other interests, the retailer said, adding that his resignation was not the result of a disagreement with the company regarding its operations or practices. In exchange for his release of all potential claims against the company, the filing said Flahery will continue to receive his base salary for fifteen months following his termination. Janna Minton will become Sally Beauty's interim principal financial officer when Flaherty steps down. Minton, who has served as Sally Beauty's group vice president, chief accounting officer and controller since October 2015, she will serve as PFO until the company appoints Flaherty's successor.

WHAT'S NOTABLE: This morning's decline reverses gains earlier this week following an announcement that Sally Beauty will join the S&P MidCap 400, replacing R.R. Donnelley & Sons (RRD).

ANALYST REACTION: In a note to clients, Oppenheimer analyst Rupesh Parikh called Flaherty's resignation "surprising," and said he did "not get a sense of a coming management change" when the firm met with management a few weeks ago. Parikh said CFO resignations later in the quarter "tend to worry us," as they can sometimes foreshadow "softer" financial performance," which he said is a "possibility" given two weak quarters at the Sally Beauty Supply segment.

PEERS: In addition to direct peer Ulta (ULTA), Sally Beauty has been faced with competition from Macy's (M) and J.C. Penney (JCP), who are looking to expand their beauty offerings, as well as online retailers like Amazon (AMZN). Retail competition is also more active with drugstores like CVS (CVS) and Rite Aid (RAD) expanding their beauty displays and brands opening their own stores.

PRICE ACTION: Sally Beauty is down over 4% in morning trading to $26.79.