Ulta Beauty's same-store sales take a surprising turn, and retailer's stock drops 7%

By Claudia Assis

Ulta Beauty cuts its 2024 guidance as well

Shares of Ulta Beauty Inc. dropped more than 7% in the extended session Thursday after the specialty retailer reported worse-than-expected quarterly earnings, cut its guidance and showed a drop in same-store sales against expectations of an increase.

Ulta's (ULTA) fiscal second-quarter results "did not meet our expectations," mostly due to a drop in same-store sales, Chief Executive Dave Kimbell said in a statement.

In a call with analysts following results, Kimbell said that the company is "clear" about the factors that dragged same-store sales down and that it is addressing the shortcomings in the number of transactions.

The beauty category remains resilient, but growth is normalizing after three years of gains, he said. Additionally, people are focusing on value and becoming more cautious, and competition in the beauty business remains high.

And Ulta's market share continues to be challenged, particularly when it comes to pricier beauty products, Kimbell said.

Ulta earned $252.6 million, or $5.30 a share, in the quarter, compared with $300.1 million, or $6.02 a share, in the year-ago quarter. Analysts polled by FactSet expected earnings of $5.47 a share.

Revenue rose 1% to $2.6 billion, in line with FactSet expectations of $2.61 billion.

Comparable-store sales dropped 1.2%, due to a 1.8% decline in transactions and a 0.6% increase in average ticket. The analysts surveyed by FactSet expected a 1.2% rise in same-store sales.

Ulta cut its guidance for fiscal 2024 revenue, comparable sales and per-share earnings, and the new outlook is below Wall Street's expectations across the board.

It calls for revenue of $11 billion to $11.2 billion, compared with a previous guidance of $11.5 billion to $11.6 billion. Ulta now sees comparable sales declining 2% or staying flat in the year, whereas it had called for an increase between 2% and 3%. The company cut its EPS estimates to $22.60 to $23.50, from $25.20 to $26.

-Claudia Assis

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08-29-24 2046ET

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