Ulta’s Stock Declines as CEO Cautions on Slowing Beauty Demand

Ulta Beauty shares took a hit, plummeting approximately 13% on Wednesday, following CEO Dave Kimbell’s caution about a cooling demand for beauty products.

“We have seen a slowdown in the total category,” Kimbell said during an investor conference hosted by JPMorgan Chase. “We came into the year — and we talked about this on our [earnings] call a few weeks ago — expecting the category to moderate.

It has [had], as I said, several years of strong growth. We did not anticipate it would continue at the rate that it’s been growing.”

Kimbell mentioned that Ulta expected sales to grow in the mid-single-digits for the year, but noted that the slowdown has been “a bit earlier and a bit bigger than we thought.”

Ulta's Stock Declines as CEO Cautions on Slowing Beauty Demand
Ulta Beauty shares plummeted 13% due to the CEO’s warning of cooling demand for beauty products. (Credits: Google Finance)

This trend has affected various price points and beauty categories, with a more significant impact observed in prestige makeup and haircare.

Beauty has been a standout category in retail, even amidst consumers tightening their spending on discretionary items like clothing.

Retailers have increasingly invested in beauty, with Target expanding its Ulta Beauty shops, Kohl’s planning to open Sephora shops in all locations, and Macy’s expanding its Bluemercury beauty chain.

Ulta's Stock Declines as CEO Cautions on Slowing Beauty Demand
Kimbell anticipates mid-single-digit sales growth, noting a slowdown in various beauty categories.

However, Kimbell highlighted that beauty shoppers are not immune to economic pressures, citing factors such as rising credit card debt, geopolitical conflicts, and the upcoming presidential election, which may influence consumer spending behavior.

Ulta projected net sales ranging from $11.7 billion to $11.8 billion for its 2024 fiscal year, higher than the $11.2 billion reported for the most recent fiscal year. Comparable sales are expected to increase by 4% to 5% this fiscal year, a slowdown from previous years.

Ulta’s stock was trading around $447 midday on Wednesday, down from a 52-week high of $574.76 in mid-March. So far this year, Ulta shares are down nearly 8%, trailing the gains of the S&P 500.

Sajda Parveen
Sajda Parveen
Sajda Praveen is a market expert. She has over 6 years of experience in the field and she shares her expertise with readers. You can reach out to her at [email protected]
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