An Ulta Beauty store in New York, USA, on Monday, August 19, 2024.
Yuki Iwamura | Bloomberg | Getty Images
ultimate beauty Shares of the company fell on Wednesday morning as the company said it saw “headwinds” and more competition in the beauty industry.
The specialty retailer held an investor day event Wednesday near its Chicago headquarters where it maintained its forecast for the current fiscal year. Ulta said it expects net sales to be between $11 billion and $11.2 billion, with comparable sales declining 2% to roughly flat. The company said earnings per share would be between $22.60 and $23.50.
Ulta said its financial targets will be 4% to 6% net sales growth and double-digit diluted earnings per share growth through 2026 and beyond. The company said it expects operating profit to grow by mid-single digits, with an operating margin of approximately 12% of net sales.
But it did not provide a specific outlook for fiscal 2025. The update comes after the company missed Wall Street’s profit expectations and It revised its full-year 2024 forecast downward in August.
Chief Executive Dave Kimbell said in opening remarks at the investor day that this year was “more challenging than planned.” Kimbell said the beauty category has normalized to more modest historical growth levels, with a more volatile consumer backdrop and more competition, especially in premium categories.
He said the company was taking action to increase sales by engaging customers through partnerships with new brands, expanded loyalty programs and personalized promotions.
Additionally, he said demographic trends will drive Ulta’s growth. More and more men are buying beauty products, including fragrances and self-care products.
The younger generation, Generation Z and Generation Alpha, More interested in beauty consumption Especially when it comes to skin care or self-expression compared to previous generations, Kimbell said. Hispanic customers tend to be more enthusiastic about the category, he added, and they make up a growing share of the U.S. population.
“While we expect some of these headwinds to persist in the near term, we remain confident in our ability to execute our plans and position ourselves for long-term growth,” he said.
Chief Marketing Officer Monica Arnaudo said in a presentation Wednesday that Ulta will increase its focus on exclusive products, lead beauty trends and launch a portfolio of trusted, beloved brands as well as promising up-and-comers.
“We are experts at identifying (and) working with our brand partners to bring key trends to market,” she said. “As the market becomes increasingly competitive, this will be more important than ever.”
In cosmetics, for example, more and more shoppers are looking for multi-purpose products and supplies to create a glamorous look. When it comes to skin care products, as consumers become more health-conscious, they want to know more about the ingredients in products and want brands recommended by dermatologists, she said. When it comes to hair care, consumers are thinking beyond shampoo and conditioner, adding scalp care products or products specifically designed for curly and textured hair.
Arnaudo said the company already has more than 40 exclusive brands and more than 65 brands with some exclusive products.
This story is developing. Please check back for updates.
