Ulta Beauty’s full-year profit outlook fell below Wall Street estimates due to increased supply chain costs and heightened promotions, leading to a 4.5% drop in its shares during extended trading on Thursday.
Despite the beauty retailer’s efforts to stimulate sales through significant discounts, consumers cautious of inflation reduced spending on discretionary items like cosmetics and hair care products.
While the pressure from retail shrink, caused by inventory loss or damage from theft and breakage, has been mounting over recent years, it remains a persistent challenge for retailers, with many companies noting its impact on margins.
Ulta Beauty now anticipates its annual operating margin to range between 14.0% and 14.3%, down from the 15.0% reported in 2023.
The company forecasts annual adjusted earnings per share to fall between $26.20 and $27.00, with the mid-point below analysts’ average estimate of $27.00 per share, according to LSEG data.
Ulta Beauty expects fiscal 2024 revenue to range between $11.7 billion and $11.8 billion, mostly exceeding LSEG estimates of $11.69 billion.
For the fourth quarter ended Feb. 3, the beauty retailer reported a profit of $8.08 per share, surpassing expectations of $7.53. Quarterly revenue increased approximately 10% year-on-year to $3.6 billion, ahead of analysts’ expectations of $3.53 billion.
Shares of the Illinois-based company reached an intraday record high on Thursday before closing at $565.44. The stock has surged about 15% in 2024.
