As Ulta Beauty says it expects a slowdown in retail's most resilient category, one startup says it's bucking the trend.
rare technologyThe new public Israeli cosmetics platform that uses artificial intelligence to develop products, published first quarter results that exceeded expectations and raised its full-year forecasts.
Here's how the beauty retailer behind the Il Makiage and Spoiled Child brands performed compared to what Wall Street anticipated, according to a survey of analysts by LSEG:
- Earnings per share: 61 cents adjusted versus 49 cents expected
- Revenue: $211.63 million vs. $205 million expected
The company reported net income of $32.98 million, or 53 cents per share, for the three months ended March 31, compared with $19.59 million, or 35 cents per share, for the year former. Excluding one-time items, Oddity reported earnings of 61 cents per share.
Sales rose to $212 million, up about 28% from $166 million a year earlier.
The company now expects full-year revenue to be between $626 million and $635 million, compared to a previous outlook of $620 million to $630 million. Analysts were expecting $627 million, according to LSEG. It expects adjusted earnings per share to be between $1.57 and $1.62, down from previous guidance of $1.49 to $1.54. Analysts were expecting $1.51, according to LSEG.
For the current quarter, Oddity expects sales to be between $185 million and $189 million, and adjusted earnings per share to be in the range of 61 cents to 64 cents. Analysts had expected revenue of $186.5 million and earnings per share of 56 cents, according to LSEG.
Shares rose nearly 10% in extended trading on Tuesday.
Oddity, which began trading on the Nasdaq in July, aims to disrupt the traditional beauty and wellness industry by using artificial intelligence to develop new products and personalized recommendations.
Oddity believes that beauty and wellness products sell better online and that consumers will not need to visit salons like Ulta and Sephora if product selection can be improved.
Last month, Ulta Beauty CEO Dave Kimbell warned that demand for beauty products was cooling, sending its stock down 15% that day and weighing on Ulta Beauty shares. elf beauty, Estee Lauder and coty.
“We've seen a slowdown in the overall category,” Kimbell said at an investor conference hosted by JPMorgan Chase. “We came in a year and talked about this in our [earnings] I called a few weeks ago, hoping the category would moderate. Has [had]As I said, several years of strong growth. “We didn't anticipate it would continue at the rate it has been growing.”
He added that the slowdown has been “a little earlier and a little bigger than we thought.” Kimbell said the drop has affected all price points and beauty categories, but has been most significant in prestige makeup and hair care.
Lindsay Drucker Mann, Oddity's chief financial officer, disagreed that the category is slowing down.
“There is no slowdown for us, neither in our new users, nor in the way our existing users behave. If anything, the quarter shows that there is massive demand for online services,” Drucker Mann told CNBC in a interview.
“What we do see is an industry that is transforming,” he said. “So the consumer is moving online and the consumer is moving to highly effective products that really solve their problems and these are two really unstoppable trends that we see driving the industry that we lead.”
Read the full earnings release here.
