Shares of Ulta Beauty fell Wednesday after the cosmetics retailer said it expects first-quarter same-store sales to increase at the lower end of its previous outlook.
Ulta executives said Wednesday at the JPMorgan Retail Roundup Conference that overall category growth has slowed more than expected. If the category continues to underperform, “we expect our first-quarter results to be at the lower end of our low-single-digit first-half guidance.”
Alta stock fell 12% to $454.84, its biggest decline since May 26, 2023, according to Dow Jones Market Data.The stock was the worst performer of them all.
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on wednesday.
The announcement from Ulta hurt cosmetics stocks because these companies sell their products in Ulta stores. Elf Beauty’s stock price fell 11%, marking its biggest decline since March 16, 2020. Coty shares fell 4.4%, Estée Lauder fell 3.7% and L’Oréal American Depositary Receipts fell 1.8%.
On March 15, beauty products retailer Ulta Inc. said it expects fiscal 2024 earnings to range from $26.20 to $27 per share, below analysts’ expectations of $27.01 per share. Alta stock fell 5.2%. Ulta also said it expects the category to “remain healthy, but growth will slow to mid-single digits absent a major economic event” in 2024.
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Management added on Wednesday that while consumers remain highly interested in purchasing cosmetics, the company is coming off several years of growth and experiencing a “fluctuating economic environment.”
It would not be surprising if the cosmetics category slowed down. Beauty has historically been a resilient sector, particularly in times of economic uncertainty, where people still choose to spend money on their favorite foundation or lipstick despite broader macro risks. When there is, it is. In this climate, beauty companies like Ulta and elf are experiencing strong growth. For example, Ulta’s revenue has increased every year since 2021, with 2024 revenue of $11.2 billion, 67% higher than 2019 revenue of $6.7 billion.
That doesn’t mean the risk of an economic slowdown isn’t worrying investors. Ulta stock has fallen 6.8% this year.
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Email Angela Palumbo at angela.palumbo@dowjones.com.
