Ulta shares fall as CEO warns beauty demand is slowing

People walk past an Ulta Beauty store in the Manhattan borough of New York, New York, United States, March 8, 2022.

Carlo Allegri | Reuters

Ulta Beauty shares fell about 13% on Wednesday as CEO Dave Kimbell warned of slowing demand for beauty products.

Other segment values, including Elf Beauty, Estee Lauder And Cotyalso fell Wednesday morning.

“We’ve seen a slowdown across the category,” Kimbell said at an investor conference hosted by JPMorgan Chase. “We started the year – and we talked about this on our (earnings) call a few weeks ago – expecting the category to moderate. It (had), as I said , several years of strong growth. We did not anticipate it. would continue at the rate it is growing.”

He said Ulta expects its sales to increase in the mid-single digit range for the year.

But Kimbell added that the slowdown was “a little earlier and a little bigger than we thought.” He said this trend extends across all price points and different categories of beauty products, but is most significant in prestige makeup and hair care.

Beauty has established itself as one of the most popular categories in retail. Even as U.S. consumers watch their spending on discretionary items like clothing, they continue to gravitate toward makeup, skin care items and other beauty products. The strength of this category has prompted many retailers to focus more on beauty.

Target has opened a growing number of Ulta Beauty boutiques within its stores. Kohl’s plans to open Sephora stores in all of its locations. Macy’s is expanding its Bluemercury beauty product chain.

However, in her remarks Wednesday, Kimbell said beauty shoppers aren’t immune to economic pressures, even in a red-hot category. He discussed dynamics that could lead them to cut spending, including rising credit card debt, geopolitical conflicts and the upcoming presidential election.

“It just creates this soup of activities for our consumers that they’re trying to navigate,” he said.

Ulta said on an earnings conference call last month that it expected net sales to be between $11.7 billion and $11.8 billion for its 2024 fiscal year. That would be higher than the $11.2 billion in sales reported for the last fiscal year.

The retailer said it expects comparable sales, a measure that excludes the impact of store openings and closures, to increase 4% to 5% this fiscal year. This would represent a slowdown from growth of 5.7% in the previous fiscal year and 15.6% in FY2022.

Ulta’s stock was trading around $447 as of midday Wednesday. Its shares hit a 52-week high of $574.76 in mid-March, just before the holiday quarter’s results were released. Year to date, Ulta shares are down nearly 8%, trailing the S&P 500’s nearly 10% gains.


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