Ulta Beauty On Thursday it unveiled plans to boost sales and gain market share after a sales slowdown in the first quarter.
Comparable sales, a metric that tracks Ulta stores open at least 14 months along with online sales, rose 1.6% year over year, a marked slowdown from the same period a year ago, when Ulta reported growth comparable sales of 9.3%.
“We expect growth to accelerate in the second half of the year, between 2% and 4%, reflecting the impact of our sales driving initiatives,” CFO Paula Oyibo said during the conference call on company results.
Ulta CEO Dave Kimbell warned in April about cooling demand in the beauty category at an investor conference. And although the slowdown was largely anticipated, Kimbell said it hit the company “a little earlier and a little bigger” than expected.
Kimbell acknowledged Thursday that market share has been challenged in recent quarters, particularly within the prestige beauty category.
“We are not satisfied with our market share trends and are taking steps to reinforce our leadership position and accelerate growth,” Kimbell said during the earnings call, adding that the company will share more long-term plans in due course. of analysts in October.
Kimbell outlined five key areas where the company plans to take concrete steps: strengthening the assortment across 25 new brands, including Ulta exclusives with celebrities like Serena Williams and Bella Hadid; accelerate social relevance by expanding your network of creators; improve the consumer's digital experience; take advantage of the loyalty program; and evolving promotion levers.
The company will also expand its partnership with delivery service. DoorDash, where it offers same-day delivery from its stores, and relies on adoption of its app. The Ulta app accounted for 57% of e-commerce sales in the quarter, Kimbell said.
Kimbell also announced that the company is testing new gamification platforms and, later this year, will activate new marketing technology that will help guests personalize their shopping experience.
Ulta shares gained about 11% in extended trading Thursday.
Here's how the beauty company performed during the period compared to what Wall Street expected, according to a survey of analysts by LSEG:
- Earnings per share: $6.47 vs. $6.24 expected
- Revenue: $2.73 billion vs. $2.72 billion expected
Ulta reported net income for the quarter ended May 4 of $313.1 million, or $6.47 per share, compared with $347.1 million, or $6.88 per share, a year earlier.
Net sales rose slightly to $2.73 billion from $2.63 billion a year earlier.
The company lowered its guidance for the fiscal year. Ulta reported that it now expects net sales in the range of $11.5 billion to $11.6 billion and comparable sales in the range of 2% to 3%. It had previously forecast full-year net sales of between $11.7 billion and $11.8 billion and comparable sales of 4% to 5%.
Ulta also revised its full-year earnings per share guidance to a range of $25.20 to $26, down from its previous guidance of $26.20 to $27.
Ulta Beauty has been a strong performer for retailers as they face consumer pushback in light of persistently higher costs. beauty brand elf recently reported its first $1 billion fiscal year, beating Wall Street estimates and sending stocks soaring.
Beauty company powered by artificial intelligence rare technology recently told CNBC that the industry is not so much seeing a slowdown but rather a change in business.
“What we do see is an industry that is transforming. So the consumer is moving online and the consumer is migrating to highly effective products that really solve their problems,” Oddity CFO Lindsay told CNBC. Drucker Mann.
Wall Street's view of Ulta has been cooling ahead of the company's earnings report, with analysts at Baird and Canaccord Genuity lowering their price targets in recent days.
“We believe the beauty category is resilient. Despite reduced spending on discretionary items, consumers continue to prioritize beauty products, leading to significant growth in this category,” Jane Hali & Associates analysts said in a recent note in Ulta, and added that although they view the wellness category as a key strength, they are cautious about the makeup category.
The company's stock closed Thursday at $385.58 per share, bringing the company's market value to about $18.5 billion.
