Ulta Beauty
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Ulta Beauty reported on Thursday fiscal first-quarter earnings that showed the effects of a slowdown its CEO had previously warned about.
Comparable sales, a metric that tracks Ulta stores open at least 14 months along with online sales, increased 1.6% year over year, a stark slowdown from the same period a year earlier when Ulta reported comparable sales growth of 9.3%
The company lowered their guidance for the fiscal year. Ulta reported that it is now expecting net sales in the range of $11.5 billion to $11.6 billion and comparable sales in the range of 2% to 3%. The company previously guided to full-year net sales of $11.7 billion to $11.8 billion and comparable sales of 4% to 5%.
Ulta also revised its full-year earnings per share guidance to a range of $25.20 to $26, down from its previous guidance of $26.20 to $27.
Ulta CEO Dave Kimbell in April warned of cooling demand in the beauty category at an investor conference. And while the slowdown was largely anticipated, Kimbell said that it hit the beauty company “a bit earlier and bit bigger” than it had expected.
Here’s how the beauty company performed during the period compared with what Wall Street was anticipating, based on a survey of analysts by LSEG:
- Earnings per share: $6.47 cents vs. $6.24 expected
- Revenue: $2.73 billion vs. $2.72 billion expected
Ulta reported net income for the quarter ended April 24 of $313.1 million, or $6.47 cents per share, compared with $347.1 million, or $6.88 per share, a year earlier.
Net sales rose slightly to $2.73 billion, up slightly from $2.63 billion a year earlier.
Beauty has been a strong point for retailers as they face a consumer pullback in light of persistently higher costs. Beauty brand e.l.f recently reported its first billion-dollar fiscal year, blowing past Wall Street estimates and sending shares soaring.
AI-powered beauty company Oddity Tech recently told CNBC the industry isn’t seeing so much a slowdown, but a shift.
“What we do see is an industry that’s transforming. So the consumer is moving online and the consumer is moving to high-efficacy products that really solve their problems,” the company’s CFO, Lindsay Drucker Mann, told CNBC.
The Wall Street view of Ulta has been cooling ahead of the company’s earnings report, with analysts at Baird and Canaccord Genuity lowering their price targets in recent days.
“We believe the beauty category is resilient. Despite reduced spending on discretionary items, consumers continue to prioritize beauty products, leading to significant growth in this category,” analysts at Jane Hali & Associates said in a recent note on Ulta, adding that although they view the wellness category as a key strength, they are cautious on the makeup category.
Shares of the company closed at $385.58 per share on Thursday, bringing the company’s market value to about $18.5 billion.