This weighed down on e.l.f. and Estée Lauder stocks, as well.
Ulta Beauty Inc. shares slid 29% Friday, putting them on track for their biggest ever one-day percentage decline, after the beauty products retailer warned that sales headwinds would dent future earnings.
But it was the lowered guidance that really hammered the stock. Ulta lowered its same-store sales growth expectations to 4% to 6% for the year, from previous guidance of growth of 6% to 7%. It cut its per-share earnings forecast to $11.86 to $12.06 from a previous $12.83 to $13.03. “We think these drivers have moderated while the distinermediation risk from digitally native brands seems higher,” Gutman wrote, “In our view, this limits upside for both Ulta’s multiple and earnings growth in the near term.”Read: Newly public luxury secondhand retailer the RealReal says it occupies a ‘space of one’
Management said cosmetics sales were hit by a lack of meaningful “newness and incrementality,” meaning any newness was not really resonating with consumers, and even when it did, it was not encouraging them to buy ancillary items such as make-up brushes. Hofkin said he’s sticking with his outperform rating on the stock, however, because he continues to view the company as having a solid long-term growth story.
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